The reversible modification of cysteine residues by thioester formation with palmitate (S-palmitoylation) is an abundant lipid post-translational modification (PTM) in mammalian systems. S-palmitoylation has been observed on mitochondrial proteins, providing an intriguing potential connection between metabolic lipids and mitochondrial regulation. However, it is unknown whether and/or how mitochondrial S-palmitoylation is regulated. Here we report the development of mitoDPPs, targeted fluorescent probes that measure the activity levels of "erasers" of S-palmitoylation, acyl-protein thioesterases (APTs), within mitochondria of live cells. Using mitoDPPs, we discover active S-depalmitoylation in mitochondria, in part mediated by APT1, an S-depalmitoylase previously thought to reside in the cytosol and on the Golgi apparatus. We also find that perturbation of long-chain acyl-CoA cytoplasm and mitochondrial regulatory proteins, respectively, results in selective responses from cytosolic and mitochondrial S-depalmitoylases. Altogether, this work reveals that mitochondrial S-palmitoylation is actively regulated by "eraser" enzymes that respond to alterations in mitochondrial lipid homeostasis.