Scd6, a yeast homologue of human RAP55, is a component of messenger ribonucleoproteins (mRNPs) that repress translation by binding to translation initiation factors, and also is a decapping activator along with the binding partners Edc3 and Dhh1. Herein, we report that Scd6 is a substrate of the intrinsic protein arginine methyltransferase, Hmt1, in budding yeast Saccharomyces cerevisiae. Mass spectrometric analysis revealed that several arginine residues within the Scd6 RGG motif, which is important for mRNA binding, were methylated in Hmt1 dependent manner. Under stress conditions such as glucose starvation, Scd6 localized to cytoplasmic processing bodies (P-bodies) wherein translationally repressed mRNPs and untranslated mRNAs accumulate. Localization of Scd6 to P-bodies was impaired in hmt1 deletion mutant and in the presence of methylation-deficient substitution of Scd6. In addition, deletion of scd6 and dhh1 led to severe synthetic growth defect at high temperature. Methylation-deficient mutation of Scd6 suppressed the phenotypic defects of scd6 dhh1 double mutant, whereas methylation-mimic mutation did not, suggesting that the arginine methylation might negatively regulate Scd6 function relating to Dhh1. Therefore, the present data suggest that Hmt1-based arginine methylation is required for Scd6 localization and function.