Processing bodies (P-bodies) are cytoplasmic ribonucleoprotein (RNP) granules primarily composed of translationally repressed mRNAs and proteins related to mRNA decay, suggesting roles in post-transcriptional regulation. P-bodies are conserved in eukaryotic cells and exhibit properties of liquid droplets. However, the function of P-bodies in translational repression and/or mRNA decay remains contentious. Here we review recent advances in our understanding of the molecular composition of P-bodies, the interactions and processes that regulate P-body liquid-liquid phase separation (LLPS), and the cellular localization of mRNA decay machinery, in the context of how these discoveries refine models of P-body function.