The fission yeast small GTPase Rho2 regulates morphogenesis and is an upstream activator of the cell integrity pathway, whose key element, mitogen-activated protein kinase (MAPK) Pmk1, becomes activated by multiple environmental stimuli and controls several cellular functions. Here we demonstrate that farnesylated Rho2 becomes palmitoylated in vivo at cysteine-196 within its carboxyl end and that this modification allows its specific targeting to the plasma membrane. Unlike that of other palmitoylated and prenylated GTPases, the Rho2 control of morphogenesis and Pmk1 activity is strictly dependent upon plasma membrane localization and is not found in other cellular membranes. Indeed, artificial plasma membrane targeting bypassed the Rho2 need for palmitoylation in order to signal. Detailed functional analysis of Rho2 chimeras fused to the carboxyl end from the essential GTPase Rho1 showed that GTPase palmitoylation is partially dependent on the prenylation context and confirmed that Rho2 signaling is independent of Rho GTP dissociation inhibitor (GDI) function. We further demonstrate that Rho2 is an in vivo substrate for DHHC family acyltransferase Erf2 palmitoyltransferase. Remarkably, Rho3, another Erf2 target, negatively regulates Pmk1 activity in a Rho2-independent fashion, thus revealing the existence of cross talk whereby both GTPases antagonistically modulate the activity of this MAPK cascade.