Subcellular localization of mRNAs within the Drosophila oocyte is an essential step in body patterning. Yps, a Drosophila Y-box protein, is a component of an ovarian ribonucleoprotein complex that also contains Exu, a protein that plays an essential role in mRNA localization. Y-box proteins are known translational regulators, suggesting that this complex might regulate translation as well as mRNA localization. Here we examine the role of the yps gene in these events. We show that yps interacts genetically with orb, a positive regulator of oskar mRNA localization and translation. The nature of the genetic interaction indicates that yps acts antagonistically to orb. We demonstrate that Orb protein is physically associated with both the Yps and Exu proteins, and that this interaction is mediated by RNA. We propose a model wherein Yps and Orb bind competitively to oskar mRNA with opposite effects on translation and RNA localization.