Myelin proteolipid protein (PLP) contains covalently bound long-chain fatty acids. A large proportion of these acyl moieties are bound in thioester linkages, as demonstrated by alkylation of newly formed SH groups upon deacylation. To identify the Cys residue(s) involved in the thioester linkage(s), reduced and carboxyamidomethylated proteolipid protein was labeled with [14C]iodoacetamide upon deacylation with neutral hydroxylamine. The labeled protein was digested with trypsin or pepsin, and peptides analyzed by RP-HPLC. Identification of the isolated radioactive peptides by amino acid analysis, peptide sequencing and/or fast-atom bombardment-mass spectrometry revealed that Cys108 in the bovine PLP sequence is an acylated site. The sequence surrounding the palmitoylation site in the myelin PLP is strikingly similar to that found in rhodopsin. Furthermore, as in rhodopsin and other members of the G protein-coupled receptor family, this Cys residue is located within a hydrophilic, basic, and possibly cytoplasmic, domain.