Long double-stranded RNAs (dsRNAs) may undergo extensive modification (hyperediting) by adenosine deaminases that act on RNA (ADARs), where up to 50% of adenosine (A) residues are changed to inosine (I). Traditionally, consequences of A-to-I editing were thought to be limited to modified RNA itself. We show here, however, that hyperedited dsRNA (I-dsRNA) is able to downregulate gene expression in trans. Furthermore, we show that both endogenous expression and reporter gene expression were substantially reduced in the presence of I-dsRNA. This was due to a reduction in reporter mRNA levels and also translation inhibition. Importantly, we show that I-dsRNA interferes with translation initiation. We also show that I-dsRNA specifically binds a stress-granule-like complex. Stress granules (SGs) are important for translational silencing during stress. Finally, we propose a model whereby editing by ADARs results in downregulation of gene expression via SG formation.