RNA localization is tightly coordinated with RNA stability and translation control. Bicaudal-D (Bic-D), Egalitarian (Egl), microtubules and their motors are part of a Drosophila transport machinery that localizes mRNAs to specific cellular regions during oogenesis and embryogenesis. We identified the Poly(A)-binding protein (Pabp) as a protein that forms an RNA-dependent complex with Bic-D in embryos and ovaries. pabp also interacts genetically with Bic-D and, similar to Bic-D, pabp is essential in the germline for oocyte growth and accumulation of osk mRNA in the oocyte. In the absence of pabp, reduced stability of osk mRNA and possibly also defects in osk mRNA transport prevent normal oocyte localization of osk mRNA. pabp also interacts genetically with osk and lack of one copy of pabp(+) causes osk to become haploinsufficient. Moreover, pointing to a poly(A)-independent role, Pabp binds to A-rich sequences (ARS) in the osk 3'UTR and these turned out to be required in vivo for osk function during early oogenesis. This effect of pabp on osk mRNA is specific for this RNA and other tested mRNAs localizing to the oocyte are less and more indirectly affected by the lack of pabp.