Cytoplasmic RNA-protein (RNP) granules have diverse biophysical properties, from liquid to solid, and play enigmatic roles in RNA metabolism. Nematode P granules are paradigmatic liquid droplet granules and central to germ cell development. Here we analyze a key P granule scaffolding protein, PGL-1, to investigate the functional relationship between P granule assembly and function. Using a protein-RNA tethering assay, we find that reporter mRNA expression is repressed when recruited to PGL-1. We determine the crystal structure of the PGL-1 N-terminal region to 1.5 Å, discover its dimerization, and identify key residues at the dimer interface. Mutations of those interface residues prevent P granule assembly in vivo, de-repress PGL-1 tethered mRNA, and reduce fertility. Therefore, PGL-1 dimerization lies at the heart of both P granule assembly and function. Finally, we identify the P granule-associated Argonaute WAGO-1 as crucial for repression of PGL-1 tethered mRNA. We conclude that P granule function requires both assembly and localized regulators.