The major pathway of mRNA decay in yeast initiates with deadenylation, followed by mRNA decapping and 5'-3' exonuclease digestion. An in silico approach was used to identify new proteins involved in the mRNA decay pathway. One such protein, Edc3p, was identified as a conserved protein of unknown function having extensive two-hybrid interactions with several proteins involved in mRNA decapping and 5'-3' degradation including Dcp1p, Dcp2p, Dhh1p, Lsm1p, and the 5'-3' exonuclease, Xrn1p. We show that Edc3p can stimulate mRNA decapping of both unstable and stable mRNAs in yeast when the decapping enzyme is compromised by temperature-sensitive alleles of either the DCP1 or the DCP2 genes. In these cases, deletion of EDC3 caused a synergistic mRNA-decapping defect at the permissive temperatures. The edc3Delta had no effect when combined with the lsm1Delta, dhh1Delta, or pat1Delta mutations, which appear to affect an early step in the decapping pathway. This suggests that Edc3p specifically affects the function of the decapping enzyme per se. Consistent with a functional role in decapping, GFP-tagged Edc3p localizes to cytoplasmic foci involved in mRNA decapping referred to as P-bodies. These results identify Edc3p as a new protein involved in the decapping reaction.