Roquin is an E3 ubiquitin ligase with a poorly understood but essential role in preventing T-cell-mediated autoimmune disease and in microRNA-mediated repression of inducible costimulator (Icos) mRNA. Roquin and its mammalian paralogue membrane-associated nucleic acid binding protein (MNAB) define a protein family distinguished by an similar to 200 amino acid domain of unknown function, ROQ, that is highly conserved from mammals to invertebrates and is flanked by a RING-1 zinc finger and a CCCH zinc finger. Here we show that human, Drosophila and Caenorhabditis elegans Roquin and human MNAB localize to the cytoplasm and upon stress are concentrated in stress granules, where stalled mRNA translation complexes are stored. The ROQ domain is necessary and sufficient for localization to arsenite-induced stress granules and to induce these structures upon overexpression, and is required to trigger Icos mRNA decay. Gel-shift, SPR and footprinting studies show that an N-terminal fragment centred on the ROQ domain binds RNA from the Icos 3'-untranslated region comprising the minimal sequence for Roquin-mediated repression, adjacent to the miR-101 sequence complementarity. These findings identify Roquin as an RNA-binding protein and establish a specific function for the ROQ protein domain in mRNA homeostasis.