Dhh1 and Pat1 in yeast are mRNA decapping activators/translational repressors thought to play key roles in the transition of mRNAs from translation to degradation. However, little is known about the physical and functional relationships between these proteins and the translation machinery. We describe a previously unknown type of diauxic shift-dependent modulation of the intracellular locations of Dhh1 and Pat1. Like the formation of P bodies, this phenomenon changes the spatial relationship between components involved in translation and mRNA degradation. We report significant spatial separation of Dhh1 and Pat1 from ribosomes in exponentially growing cells. Moreover, biochemical analyses reveal that these proteins are excluded from polysomal complexes in exponentially growing cells, indicating that they may not be associated with active states of the translation machinery. In contrast, under diauxic growth shift conditions, Dhh1 and Pat1 are found to co-localize with polysomal complexes. This work suggests that Dhh1 and Pat1 functions are modulated by a re-localization mechanism that involves eIF4A. Pull-down experiments reveal that the intracellular binding partners of Dhh1 and Pat1 change as cells undergo the diauxic growth shift. This reveals a new dimension to the relationship between translation activity and interactions between mRNA, the translation machinery and decapping activator proteins. © 2011 The Author(s).