The influenza A virus hemagglutinin (HA) transmembrane domain boundary region and the cytoplasmic tail contain three cysteines (residues 555, 562, and 565 for the H3 HA subtype) that are highly conserved among the 16 HA subtypes and which are each modified by the covalent addition of palmitic acid. Previous analysis of the role of these conserved cysteine residues led to differing data, suggesting either no role for HA palmitoylation or an important role for HA palmitoylation. To reexamine the role of these residues in the influenza virus life cycle, a series of cysteine-to-serine mutations were introduced into the HA gene of influenza virus A/Udorn/72 (Ud) (H3N2) by using a highly efficient reverse genetics system. Mutant viruses containing HA-C562S and HA-C565S mutations had reduced growth and failed to form plaques in MDCK cells but formed wild-type-like plaques in an MDCK cell line expressing wild-type HA. In cell-cell fusion assays, nonpalmitoylated H3 HA, in both cDNA-transfected and virus-infected cells, was fully competent for HA-mediated membrane fusion. When the HA cytoplasmic tail cysteine mutants were examined for lipid raft association, using as the criterion Triton X-100 insolubility, loss of raft association did not show a direct correlation with a reduction in virus replication. However, mutant virus assembly was reduced in parallel with reduced virus replication. Additionally, a reassortant of strain A/WSN/33 (WSN), containing the Ud HA gene with mutations C555S, C562S, and C565S, produced virus that could form plaques on regular MDCK cells and had only moderately decreased replication, suggesting differences in the interactions between Ud and WSN HA and internal viral proteins. Analysis of M1 mutants containing substitutions in the six residues that differ between the Ud and WSN M1 proteins indicated that a constellation of residues are responsible for the difference between the M1 proteins in their ability to support virus assembly with nonpalmitoylated H3 HA.