The internalization mechanisms associated with octaarginine and stearyl-octaarginine were investigated using confocal laser microscopy and flow cytometric analysis. Octaarginine is able to translocate through cell membranes in a manner that does not exactly involve the classical endocytic pathways of internalization. However, when a stearyl moiety is attached to the N-terminus of octaarginine, the internalization shifts mainly to an endocytosis-dependent pathway. The transfection efficiency of stearyl-octaarginine was significantly higher than that of octaarginin. To understand the mechanism of the improved gene transfer by the N-terminal stearylation of octaarginine, the gene transfer processes mediated by octaarginine or stearyl-octaarginine were compared. Both octaarginine and stearyl-octaarginine are able to carry plasmid DNA into cells. The amount of plasmid DNA internalized as well as that delivered to the nucleus was higher in the case of stearyl-octaarginine. Even though the internalization mechanisms of octaarginine and stearyl-octaarginine were different, their complexes with plasmid DNA were internalized via the same pathway, presumably, the clathrin-mediated pathway of endocytosis. The results of the atomic force microscopy revealed that stearyl-octaarginine, but not octaarginine, can completely condense the DNA into stable complexes that can be highly adsorbed to the cell surface and subsequently highly internalized. Therefore, using stearylated-octaarginine provided higher internalization of plasmid DNA into cells, due to enhanced cellular association, as well as higher nuclear delivery. The results presented in this study provide a better understanding of the mechanisms of improved transfection using stearylated-octaarginine. The concept of using stearylated peptides may aid in the development of more efficient nonviral gene vectors.