Pluripotent stem cells localized in proliferating growth centers, the meristems, are the origin of lifelong organ formation and growth in higher plants. In the shoot apical meristem of Arabidopsis thaliana, the closely related ARGONAUTE proteins AGO1 and ZLL/AGO10 bind miR165/166 species to regulate mRNAs of HD-ZIP III transcription factors that are essential to maintaining stem cells. Several genetic studies showed that AGO1 and ZLL/AGO10 act redundantly to maintain stem cells. By contrast, the reported biochemical data suggested antagonistic functions: AGO1 utilizes miR165/166 to slice HD-ZIP III mRNAs, whereas ZLL/ AGO10 promotes degradation of miR165/166 and thus stabilizes HD-ZIP III mRNAs. How these different functions are balanced in stem cell regulation has remained enigmatic. Here, we show that autorepression of AGO1 through miR168-mediated slicing of its own RNA is required to maintain the ability of AGO1 to suppress HD-ZIP III mRNAs. Increased AGO1 expression, either in the miR168a-2 mutant or by transgenic expression, inhibits this ability despite the presence of high levels of miR165/166, effectively uncoupling HD-ZIP III and miR165/166 expression. AGO1 activity can be restored, however, by increasing the levels of chaperones SQN and HSP90, which promote assembly of RNA-induced silencing complex (RISC). This suggests that cellular abundance of SQN and HSP chaperones limits AGO1-mediated RNA interference in shoot meristem stem cell regulation. Localized misexpression of AGO1 indicates that the cells surrounding the shoot meristem primordium play a crucial role in stem cell development. Taken together, our study provides a framework that reconciles biochemical and genetic data, showing that restriction of AGO1 levels by miR168-mediated autorepression is key to RISC homeostasis and the function of AGO1 in stem cell regulation.