We have developed a differential cytolocalization assay (DCLA) that allows the observation of cytoplasmic protein:protein interactions in vivo. In the DCLA assay, interactions are visualized as a relocalization of a GFP-tagged “prey” by a membrane bound “bait”. This assay has been tested and utilized in C. elegans to probe interactions among proteins involved in RNA interference (RNAi) and nonsense mediated decay (NMD) pathways. Several previously documented interactions have been confirmed with DCLA, while uniformly negative results were obtained in several controls in which no interaction was expected. Novel interactions were also observed including the association of SMG-5, a protein required for NMD, to several components of the RNAi pathway. The DCLA assay can be readily carried out under diverse conditions, allowing a dynamic assessment of protein interactions in vivo. We have used this property to test a subset of the RNAi and NMD interactions in animals mutant for proteins central to each mechanism, identifying several key associations in each machinery that can occur in vivo in the absence of a functional process.