Palmitoylation of p63, a type II membrane protein localized in the endoplasmic reticulum, is induced in a reversible manner by the drug brefeldin A. To study the requirements for palmitoylation, mutant forms of p63 were expressed in COS cells and analyzed by metabolic labeling with [3H]palmitate, immunoprecipitation, and SDS-polyacrylamide gel electrophoresis. By investigating deletion and point mutations, Cys100 in the 106-amino acid cytoplasmic tail of p63 has been identified as the site of acylation. Site-directed mutagenesis of residues 99-105 together with cytoplasmic tail truncation mutants showed that the amino acids surrounding Cys100 are not critical for palmitoylation of this residue. Analysis of a chimeric construct between p63 and the plasma membrane protein dipeptidylpeptidase IV further revealed that p63 palmitoylation is not dependent on its transmembrane domain. In contrast, the six amino acid distance between the end of the predicted transmembrane domain and the palmitoylation site was found to be essential for proper acylation of p63.