Processing bodies (P-bodies) are cytoplasmic foci implicated in the regulation of mRNA translation, storage, and degradation. Key effectors of microRNA (miRNA)-mediated RNA interference (RNAi), such as Argonaute-2 (Ago2), miRNAs, and their cognate mRNAs, are localized to these structures; however, the precise role that P-bodies and their component proteins play in small interfering RNA (siRNA)-mediated RNAi remains unclear. Here, we investigate the relationship between siRNA-mediated RNAi, RNAi machinery proteins, and P-bodies. We show that upon transfection into cells, siRNAs rapidly localize to P-bodies in their native double-stranded conformation, as indicated by fluorescence resonance energy transfer imaging and that Ago2 is at least in part responsible for this siRNA localization pattern, indicating RISC involvement. Furthermore, siRNA transfection induces up-regulated expression of both GW182, a key P-body component, and Ago2, indicating that P-body localization and interaction with GW182 and Ago2 are important in siRNA-mediated RNAi. By virtue of being centers where these proteins and siRNAs aggregate, we propose that the P-body microenvironment, whether as microscopically visible foci or submicroscopic protein complexes, facilitates siRNA processing and siRNA-mediated silencing through the action of its component proteins.