Translation termination at premature termination codons (PTCs) triggers degradation of the aberrant mRNA, but the mechanism by which a termination event is defined as premature is still unclear. Here we show that the physical distance between the termination codon and the poly(A)-binding protein PABPC1 is a crucial determinant for PTC recognition in human cells. "Normal" termination codons can trigger nonsense-mediated mRNA decay (NMD) when this distance is extended; and vice versa, NMD can be suppressed by folding the poly(A) tail into proximity of a PTC or by tethering of PABPC1 nearby a PTC, indicating an evolutionarily conserved function of PABPC1 in promoting correct translation termination and antagonizing activation of NMD. Most importantly, our results demonstrate that spatial rearrangements of the 3' untranslated region can modulate the NMD pathway and thereby provide a novel mechanism for posttranscriptional gene regulation.