The clock-regulated RNA-binding protein AtGRP7 (Arabidopsis thaliana glycine-rich RNA-binding protein) influences circadian oscillations of its transcript by negative feedback at the post-transcriptional level. Here we show that site-specific mutation of one conserved arginine to glutamine within the RNA recognition motif impairs binding of recombinant AtGRP7 to its pre-mRNA in vitro. This correlates with the loss of the negative auto-regulation in vivo: in transgenic plants constitutively overexpressing AtGRP7 (AtGRP7-ox), a shift occurs to an alternatively spliced AtGRP7 transcript that decays rapidly, and thus does not accumulate to high levels. In contrast, constitutive ectopic overexpression of the AtGRP7-RQ mutant does not lead to alternative splicing of the endogenous AtGRP7 transcript and concomitant damping of the oscillations. This highlights the importance of AtGRP7 binding to its own transcript for the negative auto-regulatory circuit. Moreover, regulation of AtGRP7 downstream targets also depends on its RNA-binding activity, as AtGRP8 and other targets identified by transcript profiling of wild-type and AtGRP7-ox plants using fluorescent differential display are negatively affected by AtGRP7 but not by AtGRP7-RQ. In mutants impaired in the nonsense-mediated decay (NMD) components UPF1 or UPF3, levels of the alternatively spliced AtGRP7 and AtGRP8 transcripts that contain premature termination codons are strongly elevated, implicating UPF1 and UPF3 in the decay of these clock-regulated transcripts.