Caprin-1 is a ubiquitously expressed, well-conserved cytoplasmic phosphoprotein that is needed for normal progression through the G(1)-S phase of the cell cycle and occurs in postsynaptic granules in dendrites of neurons. We demonstrate that Caprin-1 colocalizes with RasGAP SH3 domain binding protein-1 (G3BP-1) in cytoplasmic RNA granules associated with microtubules and concentrated in the leading and trailing edge of migrating cells. Caprin-1 exhibits a highly conserved motif, F(M/I/L)Q(D/E)Sx(I/L)D that binds to the NTF-2-like domain of G3BP-1. The carboxy-terminal region of Caprin-1 selectively bound mRNA for c-Myc or cyclin D2, this binding being diminished by mutation of the three RGG motifs and abolished by deletion of the RGG-rich region. Overexpression of Caprin-1 induced phosphorylation of eukaryotic translation initiation factor 2alpha (eIF-2alpha) through a mechanism that depended on its ability to bind mRNA, resulting in global inhibition of protein synthesis. However, cells lacking Caprin-1 exhibited no changes in global rates of protein synthesis, suggesting that physiologically, the effects of Caprin-1 on translation were limited to restricted subsets of mRNAs. Overexpression of Caprin-1 induced the formation of cytoplasmic stress granules (SG). Its ability to bind RNA was required to induce SG formation but not necessarily its ability to enter SG. The ability of Caprin-1 or G3BP-1 to induce SG formation or enter them did not depend on their association with each other. The Caprin-1/G3BP-1 complex is likely to regulate the transport and translation of mRNAs of proteins involved with synaptic plasticity in neurons and cellular proliferation and migration in multiple cell types.