ABSTRACT Background Argonaute (Ago) proteins are found in all three domains of life. The best characterized group is eukaryotic Argonautes (eAgos), which are the core of RNA interference. The best understood prokaryotic Ago (pAgo) proteins are full-length pAgos. They are monomeric proteins, all composed of four major structural/functional domains (N, PAZ, MID and PIWI) and thereby closely resemble eAgos. It is believed that full-length pAgos function as prokaryotic antiviral systems, with the PIWI domain performing cleavage of invading nucleic acids. However, the majority of identified pAgos are shorter and catalytically inactive (encode just MID and inactive PIWI domains), thus their action mechanism and function remain unknown. Results In this work we focus on AfAgo, a short pAgo protein encoded by an archaeon Archaeoglobus fulgidus . We find that in all previously solved AfAgo structures, its two monomers form substantial dimerization interfaces involving the C-terminal β-sheets. Led by this finding, we have employed various biochemical and biophysical assays, including single-molecule FRET, SAXS and AFM, to test the possible dimerization of AfAgo. SAXS results confirm that WT AfAgo, but not the dimerization surface mutant AfAgoΔ, forms a homodimer both in the apo-form and when bound to a nucleic acid. Single molecule FRET and AFM studies demonstrate that the dimeric WT AfAgo binds two ends of a linear DNA fragment, forming a relatively stable DNA loop. Conclusion Our results show that contrary to other characterized Ago proteins, AfAgo is a stable homodimer in solution, which is capable of simultaneous interaction with two DNA molecules. This finding broadens the range of currently known Argonaute-nucleic acid interaction mechanisms.