Deadenylation is the major step triggering mammalian mRNA decay. One consequence of deadenylation is the formation of nontranslatable messenger RNA (mRNA) protein complexes (messenger ribonucleo-proteins mRNPs). Nontranslatable mRNPs may accumulate in P-bodies, which contain factors involved in translation repression, decapping, and 5′-to-3′ degradation. We demonstrate that deadenylation is required for mammalian P-body formation and mRNA decay. We identify Pan2, Pan3, and Caf1 deadenylases as new P-body components and show that Pan3 helps recruit Pan2, Ccr4, and Caf1 to P-bodies. Pan3 knockdown causes a reduction of P-bodies and has differential effects on mRNA decay. Knocking down Caf1 or overexpressing a Caf1 catalytically inactive mutant impairs deadenylation and mRNA decay. P-bodies are not detected when deadenylation is blocked and are restored when the blockage is released. When deadenylation is impaired, P-body formation is not restorable, even when mRNAs exit the translating pool. These results support a dynamic interplay among deadenylation, mRNP remodeling, and P-body formation in selective decay of mammalian mRNA.