Small RNAs (sRNAs) play essential roles in plants upon biotic stress. Plants utilize RNA silencing machinery to facilitate pathogen-associated molecular pattern-triggered immunity and effector-triggered immunity to defend against pathogen attack or to facilitate defense against insect herbivores. Pathogens, on the other hand, are also able to generate effectors and sRNAs to counter the host immune response. The arms race between plants and pathogens/insect herbivores has triggered the evolution of sRNAs, RNA silencing machinery and pathogen effectors. A great number of studies have been performed to investigate the roles of sRNAs in plant defense, bringing in the opportunity to utilize sRNAs in plant protection. Transgenic plants with pathogen-derived resistance ability or transgenerational defense have been generated, which show promising potential as solutions for pathogen/insect herbivore problems in the field. Here we summarize the recent progress on the function of sRNAs in response to biotic stress, mainly in plant-pathogen/insect herbivore interaction, and the application of sRNAs in disease and insect herbivore control.