mRNA turnover in eukaryotes involves the removal of m7GDP from the 5' end. This decapping reaction is mediated by a protein complex well characterized in yeast and human but not in plants. The function of the decapping complex in the development of multicellular organisms is also poorly understood. Here, we show that Arabidopsis thaliana DCP2 can generate from capped mRNAs, m7GDP, and 5'-phosphorylated mRNAs in vitro and that this decapping activity requires an active Nudix domain. DCP2 interacts in vitro and in vivo with DCP1 and VARICOSE (VCS), an Arabidopsis homolog of human Hedls/Ge-1. Moreover, the interacting proteins stimulate DCP2 activity, suggesting that the three proteins operate as a decapping complex. Consistent with their role in mRNA decay, DCP1, DCP2, and VCS colocalize in cytoplasmic foci, which are putative Arabidopsis processing bodies. Compared with the wild type, null mutants of DCP1, DCP2, and VCS accumulate capped mRNAs with a reduced degradation rate. These mutants also share a similar lethal phenotype at the seedling cotyledon stage, with disorganized veins, swollen root hairs, and altered epidermal cell morphology. We conclude that mRNA turnover mediated by the decapping complex is required for postembryonic development in Arabidopsis.