mRNA degradation is an important control point in the regulation of gene expression and has been linked to the process of translation. One clear example of this linkage is the nonsense-mediated mRNA decay pathway, in which nonsense mutations in a gene can reduce the abundance of the mRNA transcribed from that gene. For the yeast Saccharomyces cerevisiae, the Upf1 protein (Upf1p), which contains a cysteine- and histidine-rich region and nucleoside triphosphate hydrolysis and helicase motifs, was shown to be a trans-acting factor in this decay pathway. Biochemical analysis of the wild-type Upf1p demonstrates that it has RNA-dependent ATPase, RNA helicase, and RNA binding activities. A UPF1 gene disruption results in stabilization of nonsense-containing mRNAs, leading to the production of enough functional product to overcome an auxotrophy resulting from a nonsense mutation. A genetic and biochemical study of the UPF1 gene was undertaken in order to understand the mechanism of Upf1p function in the nonsense-mediated mRNA decay pathway. Our analysis suggests that Upf1p is a multifunctional protein with separable activities that can affect mRNA turnover and nonsense suppression. Mutations in the conserved helicase motifs of Upf1p that inactivate its mRNA decay function while not allowing suppression of leu2-2 and tyr7-1 nonsense alleles have been identified. In particular, one mutation located in the ATP binding and hydrolysis motif of Upf1p that changed the aspartic and glutamic acid residues to alanine residues (DE572AA) lacked ATPase and helicase activities, and the mutant formed a Upf1p:RNA complex in the absence of ATP; surprisingly, however, the Upf1p:RNA complex dissociated as a consequence of ATP binding. This result suggests that ATP binding, independent of its hydrolysis, can modulate Upf1p:RNA complex formation for this mutant protein. The role of the RNA binding activity of Upf1p in modulating nonsense suppression is discussed.