The DEAD-box RNA helicase, Dhh1, is a member of a highly conserved subfamily designated RCK/p54 helicases. Dhh1 functions as mRNA decapping activator, and is localized to discrete cytoplasmic foci known as processing bodies (P-bodies). Here, we describe the essential roles of Dhh1 in the yeast mating pathway. A dhh1 deletion mutation caused a significant decrease in the protein level of Ste12, a mating-specific transcription factor, resulting in severe mating defects. We examined the accumulation of Dhh1-GFP in P-bodies during mating. Following pheromone treatment, the P-body intensity and number increased in wild-type cells, while dhh1 mutant cells failed to show P-body formation. Both the mating and P-body phenotypes of dhh1 were suppressed by overexpression of STE12 or CAF20 encoding an eIF4E inhibitor. In wild-type cells, CAF20 overexpression led to an increased level of Ste12 protein as well as highly developed P-bodies. We propose that Dhh1 and Caf20 regulate the Ste12 protein expression and the Ste12 protein level is associated with P-body formation during mating.