Background MicroRNAs (miRNAs) have recently emerged as important gene regulators in plants. MiRNAs and their targets have been extensively studied in Arabidopsis and rice. However, relatively little is known about the characterization of miRNAs and their target genes in peach (Prunus persica), which is a complex crop with unique developmental programs. Results We performed small RNA deep sequencing and identified 47 peach-specific and 47 known miRNAs or families with distinct expression patterns. Together, the identified miRNAs targeted 80 genes, many of which have not been reported previously. Like the model plant systems, peach has two of the three conserved trans-acting siRNA biogenesis pathways with similar mechanistic features and target specificity. Unique to peach, three of the miRNAs collectively target 49 MYBs, 19 of which are known to regulate phenylpropanoid metabolism, a key pathway associated with stone hardening and fruit color development, highlighting a critical role of miRNAs in the regulation of peach fruit development and ripening. We also found that the majority of the miRNAs were differentially regulated in different tissues, in part due to differential processing of miRNA precursors. Up to 16% of the peach-specific miRNAs were differentially processed from their precursors in a tissue specific fashion, which has been rarely observed in plant cells. The miRNA precursor processing activity appeared not to be coupled with its transcriptional activity but rather acted independently in peach. Conclusions Collectively, the data characterizes the unique expression pattern and processing regulation of peach miRNAs and demonstrates the presence of a complex, multi-level miRNA regulatory network capable of targeting a wide variety of biological functions, including phenylpropanoid pathways which play a multifaceted spatial-temporal role in peach fruit development.