Maternal effect genes and encoding proteins are necessary for nuclear reprogramming and zygotic genome activation. However, the mechanisms that mediate these functions are largely unknown. Here we identified XM_359149, a Zar1-like gene that is predominantly expressed in oocytes and zygotes, which we designated Zar1-like (Zar1l). ZAR1L-EGFP formed multiple cytoplasmic foci in late two-cell-stage embryos. Expression of the ZAR1L C-terminus induced two-cell-stage embryonic arrest, accompanied with abnormal methylation of histone H3K4me2/3 and H3K9me2/3, and marked down-regulation of a group of chromatin modification factors including Dppa2, Dppa4, and Piwil2. When ectopically expressed in somatic cells, ZAR1L colocalized with P-body components including EIF2C1(AGO1), EIF2C2(AGO2), DDX6 and LSM14A, and germline-specific chromatoid body components including PIWIL1, PIWIL2, and LIN28. ZAR1L colocalized with ZAR1 and interacted with human LIN28. Our data suggest that ZAR1L and ZAR1 may comprise a novel family of processing-body/chromatoid-body components that potentially function as RNA regulators in early embryos. Developmental Dynamics 239:407–424, 2010. © 2009 Wiley-Liss, Inc.