Stress granules (SGs) are cytoplasmic aggregates of stalled translational preinitiation complexes that accumulate during stress. GW bodies/processing bodies (PBs) are distinct cytoplasmic sites of mRNA degradation. In this study, we show that SGs and PBs are spatially, compositionally, and functionally linked. SGs and PBs are induced by stress, but SG assembly requires eIF2alpha phosphorylation, whereas PB assembly does not. They are also dispersed by inhibitors of translational elongation and share several protein components, including Fas-activated serine/threonine phosphoprotein, XRN1, eIF4E, and tristetraprolin (TTP). In contrast, eIF3, G3BP, eIF4G, and PABP-1 are restricted to SGs, whereas DCP1a and 2 are confined to PBs. SGs and PBs also can harbor the same species of mRNA and physically associate with one another in vivo, an interaction that is promoted by the related mRNA decay factors TTP and BRF1. We propose that mRNA released from disassembled polysomes is sorted and remodeled at SGs, from which selected transcripts are delivered to PBs for degradation.