The Drosophila gene vasa encodes a DEAD-box protein, which is localized during early oogenesis to the perinuclear region of the nurse cells and later to the pole plasm at the posterior end of the oocyte. Posterior localization of vasa protein depends upon the functions of four genes: capu, spir, osk and stau. We have found that localization of vasa to the perinuclear nuage is abolished in most vas alleles, but is unaffected by mutations in four genes required upstream for its pole plasm localization. Thus localization of vasa to the nuage particles is independent of the pole plasm assembly pathway. Furthermore, electron-dense nuage particles are less abundant in the cytoplasm of nurse cells from vas mutants that fail to exhibit perinuclear localization, suggesting that the formation of the nuage depends upon vas function. Eight of nine vas point mutations cause codon substitutions in a region conserved among DEAD-box genes. The proteins from two mutant alleles that retain the capacity to localize to the posterior pole of the oocyte, vasO14 and vasO11, are both severely reduced in RNA-binding and -unwinding activity as compared to the wild-type protein on a variety of RNA substrates including in vitro synthesized pole plasm RNAs. Initial recruitment of vasa to the pole plasm must consequently depend upon protein-protein interactions but, once localized, vasa must bind to RNA to mediate germ cell formation.