An anti-inflammatory phenotype with pronounced immunosuppression develops during sepsis, during which time neutrophils and monocytes/macrophages limit their Toll-like receptor 4 responses to bacterial lipopolysaccharide (LPS/endotoxin). We previously reported that during this endotoxin-tolerant state, distinct signaling pathways differentially repress transcription and translation of proinflammatory cytokines such as TNFα and IL-6. Sustained endotoxin tolerance contributes to sepsis mortality. While transcription repression requires chromatin modifications, a translational repressor complex of Argonaute 2 (Ago2) and RNA-binding motif protein 4 (RBM4), which bind the 3′-UTR of TNFα and IL-6 mRNA, limits protein synthesis. Here, we show that Dcp1 supports the assembly of the Ago2 and RBM4 repressor complex into cytoplasmic processing bodies (p-bodies) in endotoxin-tolerant THP-1 human monocytes following stimulation with LPS, resulting in translational repression and limiting protein synthesis. Importantly, this translocation process is reversed by Dcp1 knockdown, which restores TNFα and IL-6 protein levels. We also find this translational repression mechanism in primary macrophages of septic mice. Because p-body formation is a critical step in mRNA translation repression, we conclude that Dcp1 is a major component of the translational repression machinery of endotoxin tolerance and may contribute to sepsis outcome.