Learning nested for loops in Python with Pig Latin translator
It's nice that you created a function.  Unfortunately, your function accepts no parameters and returns no values.  Rather, it refers to the global sentence_list as its input, and prints the output as a side-effect.  Worse, it uses global variables pig_word and pig_list, which should definitely have been local variables instead.  (Call this function a second time, and you'll have a mess!)



Your variable naming is poor, here:


# breaks up the words in the string and puts them into a list
sentence_list = sentence.split()



… and here:


for item in sentence_list:



For clarity, those should be words = sentence.split() and for word in words:, respectively.  You could then drop the comment.

Since vowels is a constant, it should be named VOWELS instead.



The for letter in vowels loop is problematic.  You just want to see whether the first letter of the word is a vowel.  The way to do that should be

if word[0] in VOWELS:




Suggested solutions

VOWELS = 'AaEeIiOoUuYy'

def pig_latin_trans(sentence):
    pig_list = []
    for word in sentence.split():
        if word[0] in VOWELS:
            pig_list.append(word + "way")
        else:
            pig_list.append(word[1:] + word[0] + "ay")
    return " ".join(pig_list)

print(pig_latin_trans(raw_input("Enter words to be translated: ")))


The loop to build pig_list could be more elegantly expressed using a generator expression.

def pig_latin_trans(sentence):
    return " ".join(
        word + "way" if word[0] in VOWELS else
        word[1:] + word[0] + "ay"
        for word in sentence.split()
    )