Heterotrimeric G proteins are covalently modified by lipids. Myristoylation of G-protein alpha subunits and prenylation of gamma subunits are stable modifications. In contrast, palmitoylation of alpha subunits is dynamic and thus has the potential for regulating protein function. Indeed, receptor activation of Gs increases palmitate turnover on the alpha subunit, presumably by stimulating deacylation. The enzymes that catalyze reversible palmitoylation of G-protein alpha subunits have not been characterized. Here we report the identification of a palmitoyl-CoA:protein S-palmitoyltransferase activity that acylates G-protein alpha subunits in vitro. Palmitoyltransferase activity is membrane-associated and requires detergent for solubilization. The preferred G-protein substrate for the enzyme activity is the alpha subunit in the context of the heterotrimer. Both myristoylated and nonmyristoylated G-protein alpha subunits are recognized as substrates. The palmitoyltransferase activity demonstrates a modest preference for palmitoyl-CoA over other fatty acyl-CoA substrates. Palmitoyltransferase activity is high in plasma membrane and present at low or undetectable levels in Golgi, endoplasmic reticulum, and mitochondria of rat liver. The subcellular localization of this enzyme activity is consistent with a role for regulated cycles of acylation and deacylation accompanying activation of G-protein signal transduction pathways.