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The growing availability of large-scale functional networks has promoted the development of many successful techniques for predicting functions of genes. Here we extend these network-based principles and techniques to functionally characterize whole sets of genes. We present RIDDLE (Reflective Diffusion and Local Extension), which uses well developed guilt-by-association principles upon a human gene network to identify associations of gene sets. RIDDLE is particularly adept at characterizing sets with no annotations, a major challenge where most traditional set analyses fail. Notably, RIDDLE found microRNA-450a to be strongly implicated in ocular diseases and development. A web application is available at http://www.functionalnet.org/RIDDLE.[1]