Staphylococcus aureus is an opportunistic human and animal pathogen with an arsenal of virulence factors that are tightly regulated during bacterial infection. The latter is achieved through a sophisticated network of regulatory proteins and regulatory RNAs. Here, we describe the involvement of a novel prophage-carried small regulatory S. aureus RNA, SprY, in the control of virulence genes. An MS2-affinity purification assay reveals that SprY forms a complex in vivo with RNAIII, a major regulator of S. aureus virulence genes. SprY binds to the 13th stem-loop of RNAIII, a key functional region involved in the repression of multiple mRNA targets. mRNAs encoding the repressor of toxins Rot and the extracellular complement binding protein Ecb are among the targets whose expression is increased by SprY binding to RNAIII. Moreover, SprY decreases S. aureus hemolytic activity and virulence. Our results indicate that SprY titrates RNAIII activity by targeting a specific stem loop. Thus, we demonstrate that a prophage-encoded sRNA reduces the pathogenicity of S. aureus through RNA sponge activity.