RNAIII is a 514 nt regulatory RNA that is the effector molecule of the staphylococcal agr quorum-sensing system, regulating a large set of virulence and other accessory genes at the level of transcription. RNAIII was discovered nearly 20 years ago and we long ago hypothesized that it would function by regulating the synthesis or activity of one or more intermediary transcription factors. We have finally confirmed this hypothesis, showing that Staphylococcus aureus RNAIII regulates the synthesis of a major pleiotropic transcription factor, Rot, by blocking its translation. RNAIII has a complex secondary structure with several stable hairpins that have highly C-rich end loops, unusual in an AT-rich organism. We noted that these loops are complementary to two G-rich stem loops of the rot mRNA translation initiation region (TIR). Pairing of the complementary RNAs would be predicted to occlude the rot Shine–Dalgarno (SD) site and to block rot translation. Through a combination of transcriptional and translational fusions and Northern and Western blot hybridization analyses, we show that RNAIII does, indeed, block rot translation. Through alterations in the C-rich loops of RNAIII and the G-rich loops of rot, we show that the sequences of these loops are critical for inhibition of rot translation and suggest that this inhibition is affected by pairing between the complementary stem loops, followed by the cleavage of rot mRNA. We propose that the RNAIII–rot mRNA interaction plays a key role in agr regulation of staphylococcal virulence.