Vacuole biogenesis depends on specific targeting and retention of peripheral membrane proteins. At least three palmitoylated proteins are found exclusively on yeast vacuoles: the fusion factor Vac8, the kinase Yck3, and a novel adaptor protein implicated in microautophagy, Meh1. Here, we analyze the role that putative acyltransferases of the DHHC family play in their localization and function. We find that Pfa3͞Ynl326c is required for efficient localization of Vac8 to vacuoles in vivo, while Yck3 or Meh1 localization is not impaired in any of the seven DHHC deletions. Vacuoleassociated Vac8 appears to be palmitoylated in a pfa3 mutant, but this population is refractive to further palmitoylation on isolated vacuoles. Vacuole morphology and inheritance, which both depend on Vac8 palmitoylation, appear normal, although there is a reduction in vacuole fusion. Interestingly, Pfa3 is required for the vacuolar localization of not only an SH4 domain that is targeted by myristate͞palmitate (as in Vac8) but also one that is targeted by a myristate͞basic stretch (as in Src). Our data indicate that Pfa3 has an important but not exclusive function for Vac8 localization to the vacuole.Yck3 ͉ SH4 domain ͉ acylation ͉ membrane targeting P rotein and lipid trafficking along the endomembrane system occurs by vesicular transport (1). Of all proteins implicated in vesicle fusion and fission, only a subset is permanently associated with membranes via transmembrane segments, whereas most are recruited to the membrane from the cytoplasm. The latter proteins depend on membrane receptors, lipids, or lipid anchors for binding to their appropriate target membrane (2). This poses the question of how the recruitment of these proteins is coordinated with their function.Palmitoylation has been discussed as a special lipid modification. It may direct proteins to specific membrane domains (3-5), and it is the only common lipid modification that is reversible, permitting cycling of a protein between membranes and cytosol. The identification and characterization of the underlying acylation͞deacylation machinery is therefore critical for understanding the function of palmitoylation. Recently, biochemical and genetic analyses have identified several proteins that are required for palmitoylation, including those of the so-called DHHC-CRD family of polytopic membrane proteins (6). Yeast contains seven homologs (Erf2, Swf1, Yol003c, Akr1, Akr2, Ydr459c, and Ynl326c͞Pfa3), which seem to be distributed throughout the endomembrane system as suggested by the GFP database and recent studies. At the ER, Swf1 is required for palmitoylation of Tlg1 (7), and Erf2 promotes Ras2 palmitoylation (8, 9). The Golgi-localized Akr1 is responsible for palmitoylation of the casein kinase I (CKI) isoform Yck2 (10). Similarly, several of the 20 or so mammalian DHHC proteins localize to distinct organelles, with critical roles for the palmitoylation of PSD-95, Ras, and SNAP-25 (11-13). This wide distribution of proteins involved in palmitoylation suggests that palmitoylati...