The Alu elements are conserved approximately 300-nucleotide-long repeat sequences that belong to the SINE family of retrotransposons found abundantly in primate genomes. Pairs of inverted Alu repeats in RNA can form duplex structures that lead to hyperediting by the ADAR enzymes, and at least 333 human genes contain such repeats in their 3'-UTRs. Here, we show that a pair of inverted Alus placed within the 3'-UTR of egfp reporter mRNA strongly represses EGFP expression, whereas a single Alu has little or no effect. Importantly, the observed silencing correlates with A-to-I RNA editing, nuclear retention of the mRNA and its association with the protein p54(nrb). Further, we show that inverted Alu elements can act in a similar fashion in their natural chromosomal context to silence the adjoining gene. For example, the Nicolin 1 gene expresses multiple mRNA isoforms differing in the 3'-UTR. One isoform that contains the inverted repeat is retained in the nucleus, whereas another lacking these sequences is exported to the cytoplasm. Taken together, these results support a novel role for Alu elements in human gene regulation.