The preS/S coding region of hepatitis B virus encodes two polypeptides (preS1 and preS2) that are larger in size but less abundant than the major viral surface antigen (S) protein. Unlike the preS2 and S proteins, the preS1 protein is preferentially localized on circulating virus particles but is not efficiently secreted from mammalian cells in culture. To search for differences in protein processing that might relate to these properties, we determined whether any of the hepatitis B virus surface proteins are acylated with long-chain fatty acids. Transfected COS cells expressing all three proteins were incubated with 3H-palmitate or 3H-myristate, and the cell extracts were examined by immunoprecipitation. While none of these proteins was labeled with 3H-palmitate, the preS1 protein but not the preS2 or S protein incorporated 3H-myristate via a hydroxylamine-resistant amide linkage. Comparison of the N-terminal amino acid sequences of hepadnaviral preS1 proteins with those of known myristylated proteins suggests that this unusual modification may be a common feature of all hepadnaviral preS1 proteins.