Proper deployment of Nanos protein at the posterior of the Drosophila embryo, where it directs posterior development, requires a combination of RNA localization and translational controls. These controls ensure that only the posteriorly-localized nanos mRNA is translated, whereas unlocalized nanos mRNA is translationally repressed. Here we describe cloning of the gene encoding Smaug, an RNA-binding protein that interacts with the sequences, SREs, in the nanos mRNA that mediate translational repression. Using an in vitro translation assay, we demonstrate that SRE-dependent repression occurs in extracts from early stage embryos. Immunodepletion of Smaug from the extracts eliminates repression, consistent with the notion that Smaug is involved. Smaug is a novel gene and the existence of potential mammalian Smaug homologs raises the possibility that Smaug represents a new class of conserved translational repressor.