Two lipids (palmitate and palmitoleic acid) are appended onto Wnt proteins. It has been suggested that palmitate is required for signalling, whereas palmitoleic acid is necessary for progression through the secretory pathway. By mutating the relevant amino acids, we have investigated how these adducts contribute to the secretion and signalling activity of Wingless, the main Drosophila member of the Wnt family. Analysis of Wingless with a Cysteine 93 to Alanine mutation ([C93A]Wingless) shows that palmitoylation is essential for signalling activity in vivo (as well as in cultured cells). Moreover, without palmitate, Wingless fails to reach the surface of imaginal disc cells and, as electron microscopy (EM) analysis suggests, appears to accumulate in the endoplasmic reticulum (ER). Artificial targeting of palmitate-deficient Wingless to the plasma membrane does not rescue signalling activity. Therefore, palmitate at C93 has a dual role: in secretion and signalling. From our analysis of [S239A]Wingless, which lacks a conserved residue shown to be acylated in Wnt3a, we infer that palmitoleic acid is not, as previously suggested, absolutely required for secretion. Nevertheless, this mutant has poor signalling activity, suggesting that palmitoleic acid contributes significantly to signalling. We suggest that the overall level of lipidation affects signalling activity.