Sphingomyelin synthase (SMS) is an enzyme that catalyzes the transfer of phosphocholine from phosphatidylcholine to ceramide for sphingomyelin synthesis. Here, we show that SMS2 is palmitoylated at cysteine residues via thioester bonds in the CCCH-terminal cytoplasmic tail. [H-3]palmitic acid labeling of SMS1 or SMS2-overexpressing HEK293 cells revealed that SMS2, but not SMS1, is palmitoylated. Site-directed mutagenesis of cysteine residues to alanine ones indicated that the COOH-terminal cysteine Cluster of the enzyme is palmitoylated. Mutation of all potential palmitoylation sites resulted in a dramatic reduction in the plasma membrane distribution of SMS2, whereas it did not affect the in vitro enzyme activity. These results suggested that this posttranslational modification is important for determination of the subcellular localization of SMS2. (C) 2009 Elsevier Inc. All rights reserved.