Anteroposterior patterning in Drosophila melanogaster is dependent on the sequence-specific RNA-binding protein Smaug, which binds to and regulates the translation of nanos (nos) mRNA. Here we demonstrate that the sterile-alpha motif (SAM) domain of Smaug functions as an RNA-recognition domain. This represents a new function for the SAM domain family, which is well characterized for mediating protein-protein interactions. Using homology modeling and site-directed mutagenesis, we have localized the RNA-binding surface of the Smaug SAM domain and have elaborated the RNA consensus sequence required for binding. Residues that compose the RNA-binding surface are conserved in a subgroup of SAM domain-containing proteins, suggesting that the function of the domain is conserved from yeast to humans. We show here that the SAM domain of Saccharomyces cerevisiae Vts1 binds RNA with the same specificity as Smaug and that Vts1 induces transcript degradation through a mechanism involving the cytoplasmic deadenylase CCR4. Together, these results suggest that Smaug and Vts1 define a larger class of post-transcriptional regulators that act in part through a common transcript-recognition mechanism.