In recent years there have been major advances with respect to the identification of the protein components and mechanisms of microRNA (miRNA) mediated silencing. However, the complete and precise repertoire of components and mechanism(s) of action remain to be fully elucidated. Herein we reveal the identification of a family of three LIM domain-containing proteins, LIMD1, Ajuba and WTIP (Ajuba LIM proteins) as novel mammalian processing body (P-body) components, which highlight a novel mechanism of miRNA-mediated gene silencing. Furthermore, we reveal that LIMD1, Ajuba, and WTIP bind to Ago1/2, RCK, Dcp2, and eIF4E in vivo, that they are required for miRNA-mediated, but not siRNA-mediated gene silencing and that all three proteins bind to the mRNA 5' m(7)GTP cap-protein complex. Mechanistically, we propose the Ajuba LIM proteins interact with the m(7)GTP cap structure via a specific interaction with eIF4E that prevents 4EBP1 and eIF4G interaction. In addition, these LIM-domain proteins facilitate miRNA-mediated gene silencing by acting as an essential molecular link between the translationally inhibited eIF4E-m(7)GTP-5(')cap and Ago1/2 within the miRISC complex attached to the 3'-UTR of mRNA, creating an inhibitory closed-loop complex.