Increasing evidence suggests that biological membranes can be laterally subdivided into domains enriched in specific lipid and protein components and that these domains may be involved in the regulation of a number of vital cellular processes. An example is membrane rafts, which are lipid-mediated domains dependent on preferential association between sterols and sphingolipids and inclusive of a specific subset of membrane proteins. While the lipid and protein composition of rafts has been extensively characterized, the structural details determining protein partitioning to these domains remain unresolved. Here, we review evidence suggesting that post-translation modification by saturated lipids recruits both peripheral and transmembrane proteins to rafts, while short, unsaturated, and/or branched hydrocarbon chains prevent raft association. The most widely studied group of raft-associated proteins are glycophosphatidylinositol-anchored proteins (GPI-AP), and we review a variety of evidence supporting raft-association of these saturated lipid-anchored extracellular peripheral proteins. For transmembrane and intracellular peripheral proteins, S-acylation with saturated fatty acids mediates raft partitioning, and the dynamic nature of this modification presents an exciting possibility of enzymatically regulated raft association. The other common lipid modifications, that is, prenylation and myristoylation, are discussed in light of their likely role in targeting proteins to nonraft membrane regions. Finally, although the association between raft affinity and lipid modification is well-characterized, we discuss several open questions regarding regulation and remodeling of these post-translational modifications as well as their role in transbilayer coupling of membrane domains.