The interaction between the poly(A)-binding protein (PABP) and eukaryotic translational initiation factor 4G (eIF4G), which brings about circularization of the mRNA, stimulates translation. General RNA-binding proteins affect translation, but their role in mRNA circularization has not been studied before. Here, we demonstrate that the major mRNA ribonucleoprotein YB-1 has a pivotal function in the regulation of eIF4F activity by PABP. In cell extracts, the addition of YB-1 exacerbated the inhibition of 80S ribosome initiation complex formation by PABP depletion. Rabbit reticulocyte lysate in which PABP weakly stimulates translation is rendered PABP-dependent after the addition of YB-1. In this system, eIF4E binding to the cap structure is inhibited by YB-1 and stimulated by a nonspecific RNA. Significantly, adding PABP back to the depleted lysate stimulated eIF4E binding to the cap structure more potently if this binding had been downregulated by YB-1. Conversely, adding nonspecific RNA abrogated PABP stimulation of eIF4E binding. These data strongly suggest that competition between YB-1 and eIF4G for mRNA binding is required for efficient stimulation of eIF4F activity by PABP.