Ankyrin-G (AnkG) coordinates protein composition of diverse membrane domains, including epithelial lateral membranes and neuronal axon initial segments. However, how AnkG itself localizes to these membrane domains is not understood. We report that AnkG remains on the plasma membrane in Madin-Darby canine kidney (MDCK) cells grown in low calcium, although these cells lack apical-basal polarity and exhibit loss of plasma membrane association of AnkG partners, E-cadherin and β(2)-spectrin. We subsequently demonstrate using mutagenesis and mass spectrometry that AnkG is S-palmitoylated exclusively at Cys-70, which is located in a loop of the first ankyrin repeat and is conserved in the vertebrate ankyrin family. Moreover, C70A mutation abolishes membrane association of 190-kDa AnkG in MDCK cells grown in low calcium. C70A 190-kDa AnkG fails to restore biogenesis of epithelial lateral membranes in MDCK cells depleted of endogenous AnkG. In addition, C70A 270-kDa AnkG fails to cluster at the axon initial segment of AnkG-depleted cultured hippocampal neurons and fails to recruit neurofascin as well as voltage-gated sodium channels. These effects of C70A mutation combined with evidence for its S-palmitoylation are consistent with a requirement of palmitoylation for targeting and function of AnkG in membrane domain biogenesis at epithelial lateral membranes and neuronal axon initial segments.