Diacylglycerol kinase-epsilon (DGKepsilon) catalyzes phosphorylation of diacylglycerol to phosphatidic acid with a unique specificity toward 1-stearoyl-2-arachidonoyl-sn-glycerol which is a backbone of phosphatidylinositol (PI).DGKepsilon plays a crucial role in the PI cycle thereby maintaining the cellular level of phosphorylated PI derivatives of signaling activity, and in lipid metabolism. DGKepsilon dysfunction is linked with the development of atypical hemolytic uremic syndrome (aHUS) and other diseases in humans. Despite the DGKepsilon significance, data on the regulation of its functioning by possible co/post-translational modifications are scarce. Here we report that DGKepsilon is S-palmitoylated at Cys38/40 (mouse/human DGKepsilon) located at the cytoplasmic end of its N-terminal putative transmembrane fragment. The S-palmitoylation of DGKepsilon was revealed by metabolic labeling of cells with a palmitic acid analogue followed by click chemistry, and with acyl-biotin and acyl-PEG exchange assays. The zDHHC7, 17 and 6/16 S-acyltransferases were found to catalyze DGKepsilon S-palmitoylation which also increased the DGKepsilon abundance, likely by affecting its stability. Given the localization of the majority of DGKepsilon and zDHHC6 in the endoplasmic reticulum and zDHHC7 and zDHHC17 in the Golgi apparatus, trafficking of a fraction of DGKepsilon through the Golgi apparatus toward the plasma membrane is plausible. The Cys38Ala substitution moderately upregulated the activity of DGKepsilon, suggesting an inhibitory effect of the acylation in wild type DGKepsilon. In contrast to Cys38Ala, the substitution of neighboring Pro31 with Ala diminished the amount and the activity of DGKepsilon. Taken together, our data indicate that S-palmitoylation can fine-tune DGKepsilon activity and affect its abundance and cellular localization.