The biochemistry and cell biology of covalent attachment of the fatty acids palmitic and myristic to proteins has been the subject of extensive investigations during the past fifteen years. While the site of attachment of fatty acids and the primary structure of proteins around the acylation site have been extensively documented, the exact role of the fatty acids have only been speculated upon. Since fatty acids would prefer to be associated with the lipid bilayer of membranes, it has been assumed that the role of the fatty acid is to provide a stable membrane anchor. This review discusses recent reports in the area of fatty acylation which suggests roles for the fatty acid other than that of a stable membrane anchor.