Nonsense-mediated mRNA decay (NMD) is a eukaryotic quality control system that identifies and degrades mRNAs containing premature termination codons (PTCs). If translation terminates at a PTC, the UPF1 NMD factor binds the terminating ribosome and recruits UPF2 and UPF3 to form a functional NMD complex, which triggers the rapid decay of the PTC-containing transcript. Although NMD deficiency is seedling lethal in plants, the mechanism of plant NMD remains poorly understood. To understand how the formation of the NMD complex leads to transcript decay we functionally mapped the UPF1 and SMG7 plant NMD factors, the putative key players of NMD target degradation. Our data indicate that the cysteine–histidine-rich (CH) and helicase domains of UPF1 are only essential for the early steps of NMD, whereas the heavily phosphorylated N- and C–terminal regions play a redundant but essential role in the target transcript degradation steps of NMD. We also show that both the N- and the C–terminal regions of SMG7 are essential for NMD. The N terminus contains a phosphoserine-binding domain that is required for the early steps of NMD, whereas the C terminus is required to trigger the degradation of NMD target transcripts. Moreover, SMG7 is a P–body component that can also remobilize UPF1 from the cytoplasm into processing bodies (P bodies). We propose that the N- and C–terminal phosphorylated regions of UPF1 recruit SMG7 to the functional NMD complex, and then SMG7 transports the PTC-containing transcripts into P bodies for degradation.