Coronavirus nucleocapsid protein is abundant in infected cells and participates in viral RNA replication and transcription. The central domain of the nucleocapsid protein contains several arginine/serine (RS) dipeptides, the biological significance of which has not been well investigated. In the present study, we demonstrate that the severe acute respiratory syndrome coronavirus nucleocapsid protein is phosphorylated primarily within the RS-rich region in cells and by SR protein kinase 1 in vitro. The nucleocapsid protein could suppress translation and its RS motif is essential for such an activity. Moreover, phosphorylation of the RS motif could modulate the translation inhibitory activity of the nucleocapsid protein. We further found that RS motif phosphorylation did not significantly affect RNA binding of the nucleocapsid protein but impaired its multimerization ability. We observed that the nucleocapsid protein could translocate to cytoplasmic stress granules in response to cellular stress. Deletion or mutations of the RS motif enhanced stress granule localization of the nucleocapsid protein, whereas overexpression of SR protein kinase 1 inhibited nucleocapsid protein localization to stress granules. The nucleocapsid protein lacking the RS motif formed high-order RNP complexes, which may also account for its enhanced stress granule localization. Taken together, phosphorylation of the severe acute respiratory syndrome-CoV nucleocapsid protein modulates its activity in translation control and also interferes with its oligomerization and aggregation in stress granules.