Translational regulation plays an essential role in development and often involves factors that interact with sequences in the 3' untranslated region (UTR) of specific mRNAs. For example, Nanos protein at the posterior of the Drosophila embryo directs posterior development, and this localization requires selective translation of posteriorly localized nanos mRNA. Spatial regulation of nanos translation requires Smaug protein bound to the nanos 3' UTR, which represses the translation of unlocalized nanos transcripts. While the function of 3' UTR-bound translational regulators is, in general, poorly understood, they presumably interact with the basic translation machinery. Here we demonstrate that Smaug interacts with the Cup protein and that Cup is an eIF4E-binding protein that blocks the binding of eIF4G to eIF4E. Cup mediates an indirect interaction between Smaug and eIF4E, and Smaug function in vivo requires Cup. Thus, Smaug represses translation via a Cup-dependent block in eIF4G recruitment.