PIWI proteins and their associated PIWI-interacting RNAs (piRNAs) protect genome integrity by silencing transposons in animal germlines. The molecular mechanisms and components responsible for piRNA biogenesis remain elusive. PIWI proteins contain conserved symmetrical dimethylarginines (sDMAs) that are specifically targeted by TUDOR domain-containing proteins. Here we report that the sDMAs of PIWI proteins play crucial roles in PIWI localization and piRNA biogenesis in Bombyx mori-derived BmN4 cells, which harbor fully functional piRNA biogenesis machinery. Moreover, RNAi screenings for Bombyx genes encoding TUDOR domain-containing proteins identified BmPAPI, a Bombyx homolog of Drosophila PAPI, as a factor modulating the length of mature piRNAs. BmPAPI specifically recognized sDMAs and interacted with PIWI proteins at the surface of the mitochondrial outer membrane. BmPAPI depletion resulted in 3′-terminal extensions of mature piRNAs without affecting the piRNA quantity. These results reveal the BmPAPI-involved piRNA precursor processing mechanism on mitochondrial outer membrane scaffolds.