We have reported previously that phospholipase D1 (PLD1) is labeled specifically with [(3)H]palmitate following transient expression and immunoprecipitation and that this modification appeared important both for membrane localization and catalytic activity. In this work we identify by mutagenesis that the acylation sites on PLD1 are cysteine residues 240 and 241, with the cysteine at position 241 accounting for most but not all of the modification. Replacement of both cysteine residues with either serines or alanines resulted in a mutant protein that contained undetectable [(3)H]palmitate. In comparison with the wild type protein, the double mutant showed reduced catalytic activity in vivo, whereas its activity in vitro was unchanged. In addition, the localization of the double mutant was altered in comparison with the wild type protein, whereas wild type PLD1 is primarily on intracellular membranes and on punctate structures, the double mutant was on plasma membrane. Because cysteines 240 and 241 lie within a putative pleckstrin homology domain of PLD1, it is likely that fatty acylation on these residues modulates the function of the PLD1 pleckstrin homology domain.