Regulation of mRNA decay is an important step modulating gene expression. The stability of numerous eukaryotic mRNAs is controlled by adenosine/uridine-rich elements (AREs) located in their 3'UTR. In Saccharomyces cerevisiae, the Cth2 protein stimulates the decay of target ARE mRNAs on iron starvation. Cth2, and its mammalian homologue tristetraprolin, contains a characteristic tandem CCCH zinc-finger essential for ARE binding and mRNA decay. We have performed a structure-function analysis of Cth2 to understand the mechanism(s) by which it destabilizes mRNAs. This indicated that a conserved N-terminal region of Cth2 is essential for its decay function but dispensable for RNA binding. Unexpectedly, Cth2 mutants lacking this domain blocked the normal 3' end processing of ARE mRNAs leading to the formation of extended transcripts. These can also be detected in mutant of the polyadenylation machinery. Consistently, Cth2 localization in the nucleus suggests that it may interfere with poly(A) site selection. Our analysis reveal that ARE-binding protein may affect mRNA 3' end processing and that this contributes to mRNA destabilization.