Gene expression and metabolism are coupled at numerous levels. Cells must sense and respond to nutrients in their environment, and specialized cells must synthesize metabolic products required for their function. Pluripotent stem cells have the ability to differentiate into a wide variety of specialized cells. How metabolic state contributes to stem cell differentiation is not understood. In this study, we show that RNA-binding by the stem cell translation regulator Musashi-1 (MSI1) is allosterically inhibited by 18-22 carbon omega-9 monounsaturated fatty acids. The fatty acid binds to the N-terminal RNA Recognition Motif (RRM) and induces a conformational change that prevents RNA association. Musashi proteins are critical for development of the brain, blood, and epithelium. We identify stearoyl-CoA desaturase-1 as a MSI1 target, revealing a feedback loop between omega-9 fatty acid biosynthesis and MSI1 activity. We propose that other RRM proteins could act as metabolite sensors to couple gene expression changes to physiological state.