Transcript degradation is a key step in gene regulation. In eukaryotes, mRNA decay is generally initiated by removal of the poly(A) tail mediated by the Ccr4-Caf1-Not complex. Deadenylated transcripts are then rapidly degraded, primarily via the decapping-dependent pathway. Components of this pathway can be localized into highly dynamic cytoplasmic foci, the mRNA processing (P)-bodies. We have undertaken confocal fluorescence microscopy to monitor P-bodies in Aspergillus nidulans. As in other organisms a dynamic shift in P-body formation occurs in response to diverse physiological signals. Significantly, both this cellular response and the signalled degradation of specific transcripts are dependent on the nuclease activity of Caf1 but not Ccr4. P-body formation is disrupted in A. nidulans strains deleted for Edc3, an enhancer of decapping, or CutA, which encodes a nucleotidyltransferase that triggers mRNA decapping by the addition of a CUCU tag to the poly(A) tail. As with DeltacutA, Deltaedc3 led to reduced rates of transcript degradation. These data link P-bodies to both the optimization and regulation of transcript degradation.