Y14 is a component of the splicing-dependent exon-exon junction complex (EJC) and is involved in the mRNA quality control system called nonsense-mediated mRNA decay. It has recently been shown that together with another EJC component, Mago, the Drosophila homologue DmY14/Tsunagi is required for proper localization of oskar mRNA during oogenesis, a process critical for posterior formation in Drosophila development. Here we show that the nematode Caenorhabditis elegans Ce-Y14 and MAG-1 (Mago homologue) are required for late embryogenesis and proper germline sexual differentiation. Like in other organisms, Ce-Y14 preferentially binds to spliced mRNA and specifically interacts with MAG-1. Consistent with the evolutionarily conserved interaction between Y14 and Mago homologues, suppression of Ce-Y14 by RNAi resulted in the same phenotypes as those caused by RNAi of mag-1 lethality during late embryogenesis and masculinization of the adult hermaphrodite germline. Our results demonstrate that the evolutionarily conserved interaction between two EJC components, Ce-Y14 and MAG-1, has critical developmental roles in C. elegans.