Severe acute respiratory syndrome (SARS) coronavirus nonstructural protein 1 (nsp1) binds to the 40S ribosomal subunit and inhibits translation, and it also induces a template-dependent endonucleolytic cleavage of host mRNAs. nsp1 inhibits the translation of cap-dependent and internal ribosome entry site (IRES)-driven mRNAs, including SARS coronavirus mRNAs, hepatitis C virus (HCV), and cricket paralysis virus (CrPV) IRES-driven mRNAs that are resistant to nsp1-induced RNA cleavage. We used an nsp1 mutant, nsp1-CD, lacking the RNA cleavage function, to delineate the mechanism of nsp1-mediated translation inhibition and identify the translation step(s) targeted by nsp1. nsp1 and nsp1-CD had identical inhibitory effects on mRNA templates that are resistant to nsp1-induced RNA cleavage, implying the validity of using nsp1-CD to dissect the translation inhibition function of nsp1. We provide evidence for a novel mode of action of nsp1. nsp1 inhibited the translation initiation step by targeting at least two separate stages: 48S initiation complex formation and the steps involved in the formation of the 80S initiation complex from the 48S complex. nsp1 had a differential, mRNA template-dependent, inhibitory effect on 48S and 80S initiation complex formation. nsp1 inhibited different steps of translation initiation on CrPV and HCV IRES, both of which initiate translation via an IRES-40S binary complex intermediate; nsp1 inhibited binary complex formation on CrPV IRES and 48S complex formation on HCV IRES. Collectively, the data revealed that nsp1 inhibited translation by exerting its effect on multiple stages of translation initiation, depending on the mechanism of initiation operating on the mRNA template.