Dicer catalyzes the cleavage of dsRNA through its RNase III domains. These domains contain catalytic residues that coordinate metal ions, typically magnesium or manganese, which are essential for the catalytic activity. The cleavage process involves the endonucleolytic cleavage of the phosphodiester bond within the dsRNA, producing siRNAs or miRNAs with characteristic 2-nucleotide overhangs at their 3' ends.