nanos mRNA, which encodes the localized component of the Drosophila posterior body patterning determinant, is normally translated only at the posterior pole of the embryo, where the mRNA is concentrated. Here we identify two similar cis-acting sequences in the nanos mRNA 3' untranslated region that mediate translational repression. These sequences bind an embryonic protein of 135 kD, smaug, and we refer to them as smaug recognition elements (SREs). Analysis of point mutations in the SREs reveals a strong correlation between smaug binding and translational repression; mutants unable to bind smaug in vitro are not repressed translationally in vivo, whereas mutants that do bind smaug remain repressed translationally. These results strongly suggest that smaug acts in translational repression of unlocalized nanos mRNA. Translational repression is essential, as embryos expressing a nanos mRNA with mutated SREs develop with anterior body patterning defects and die, despite correct localization of the RNA.