Dicer RNases produce small RNAs for RNA interference (RNAi) and microRNA (miRNA) pathways. Although vertebrate Dicers share a conserved overall architecture with other eukaryotic Dicers, they are uniquely adapted for the production of gene-regulating miRNAs. We report here this adaptation extends beyond the structured core of the enzyme and relies on an intrinsically disordered region (IDR) conserved across jawed vertebrates. This negatively charged IDR supports fidelity of miRNA biogenesis while inhibiting RNAi. The IDR projects into a positively charged substrate-binding groove of Dicer and stabilizes a pre-dicing state, which effectively licenses authentic miRNA precursors. Electron cryo-microscopy shows that removal of the IDR shifts the equilibrium from the pre-dicing to the dicing state, thus increasing enzymatic activity and broadening substrate accessibility. In cells, deletion, replacement or variations of the IDR affect fidelity of microRNA biogenesis, change substrate specificity, and enhance RNAi. Altogether, our work highlights functional relevance of unstructured protein parts, which escape attention in structural analyses, and introduces an autoinhibitory IDR element mimicking negative RNA charge as a component of the molecular grammar governing IDRs in RNA-binding proteins.