RNA interference (RNAi) is an extremely useful tool for inhibiting gene expression. It can be triggered by transfected synthetic small interfering RNA (siRNA) or by expressed small hairpin RNA (shRNA). The cellular machinery processes the latter into siRNA in vivo. shRNA is preferred or required in genetic screens and specific RNAi approaches in gene therapy settings. Despite its many successes, the field of shRNAs faces many challenges. Insufficient knockdowns and off-target effects become obstacles for shRNA usage in many applications. Numerous failures are triggered by pitfalls in shRNA design that is often associated with impoverished biogenesis. Here, based on current understanding of the miRNA maturation pathway, we discuss the principles of different shRNA design (pre-miRNA-like, pri-miRNA-like and Ago-shRNA) with an emphasis on the RNA structure. We also provide detailed instructions for an optimal design of pre-miRNA-like shRNA.