DHHC proteins catalyze the reversible S-acylation of proteins at cysteine residues, a modification important for regulating protein localization, stability, and activity. However, little is known about the kinetic mechanism of DHHC proteins. A high performance liquid chromatography (HPLC), fluorescent peptide- based assay for protein S-acylation activity was developed to characterize mammalian DHHC2 and DHHC3. Time courses and substrate saturation curves allowed the determination of V max and K m values for both the peptide N-myristoylated-GCG and palmitoyl-coenzyme A. DHHC proteins acylate themselves upon incubation with palmitoyl-CoA, which is hypothesized to reflect a transient acyl enzyme transfer intermediate. Single turnover assays with DHHC2 and DHHC3 demonstrated that a radiolabeled acyl group on the enzyme transferred to the protein substrate, consistent with a two-step ping-pong mechanism. Enzyme autoacylation and acyltransfer to substrate displayed the same acyl-CoA specificities, further supporting a two-step mechanism. Interestingly, DHHC2 efficiently transferred acyl chains 14 carbons and longer, whereas DHHC 3 activity was greatly reduced by acyl-CoAs with chain lengths longer than 16 carbons. The rate and extent of autoacylation of DHHC3, as well as the rate of acyl chain transfer to protein substrate, were reduced with stearoyl-CoA when compared with palmitoyl-CoA. This is the first observation of lipid substrate specificity among DHHC proteins and may account for the differential S-acylation of proteins observed in cells.