Partitioning of mRNAs into ribonucleoprotein (RNP) granules supports diverse regulatory programs within the crowded cytoplasm. At least two types of RNP granules populate the germ plasm, a cytoplasmic domain at the posterior of the oocyte and embryo. Germ granules deliver mRNAs required for germline development to pole cells, the germ cell progenitors. A second type of RNP granule, here named founder granules, contains mRNA, which encodes the germ plasm organizer. Whereas mRNA is essential for germ plasm assembly during oogenesis, we show that it is toxic to pole cells. Founder granules mediate compartmentalized degradation of during embryogenesis to minimize its inheritance by pole cells. Degradation of in founder granules is temporally and mechanistically distinct from degradation of and other mRNAs during the maternal-to-zygotic transition. Our results show how compartmentalization in RNP granules differentially controls fates of mRNAs localized within the same cytoplasmic domain.