During Drosophila embryogenesis, a gradient of Nanos protein emanating from the posterior pole organizes abdominal segmentation. This gradient arises from translational regulation of nanos mRNA, which is activated in the specialized cytoplasm at the posterior pole of the embryo and repressed elsewhere. Previously, we have defined cis-acting elements in the mRNA that mediate this translational switch. In this report, we identify a factor named Smaug that binds to these elements and represses translation in the bulk cytoplasm. Smaug interacts gentically and biochemically with Oskar, a key component of the pole plasm for activation of nanos mRNA and specification of the germline precursors. These observations suggest that Smaug operates a translational switch that governs the distribution of Nanos protein.