P bodies are cytoplasmic domains that contain proteins involved in diverse posttranscriptional processes, such as mRNA degradation, nonsense-mediated mRNA decay (NMD), translational repression, and RNA-mediated gene silencing. The localization of these proteins and their targets in P bodies raises the question of whether their spatial concentration in discrete cytoplasmic domains is required for posttranscriptional gene regulation. We show that processes such as mRNA decay, NMD, and RNA-mediated gene silencing are functional in cells lacking detectable microscopic P bodies. Although P bodies are not required for silencing, blocking small interfering RNA or microRNA silencing pathways at any step prevents P-body formation, indicating that P bodies arise as a consequence of silencing. Consistently, we show that releasing mRNAs from polysomes is insufficient to trigger P-body assembly: polysome-free mRNAs must enter silencing and/or decapping pathways to nucleate P bodies. Thus, even though P-body components play crucial roles in mRNA silencing and decay, aggregation into P bodies is not required for function but is instead a consequence of their activity.