Protein palmitoylation is a reversible lipid modification that plays important roles for many proteins involved in signal transduction, but relatively little is known about the regulation of this modification and the cellular location where it occurs. We demonstrate that the human delta opioid receptor is palmitoylated at two distinct cellular locations in human embryonic kidney 293 cells and undergoes dynamic regulation at one of these sites. Although palmitoylation could be readily observed for the mature receptor (Mr 55,000), [3H]palmitate incorporation into the receptor precursor (Mr 45,000) could be detected only following transport blockade with brefeldin A, nocodazole, and monensin, indicating that the modification occurs initially during or shortly after export from the endoplasmic reticulum. Blocking of palmitoylation with 2-bromopalmitate inhibited receptor cell surface expression, indicating that it is needed for efficient intracellular transport. However, cell surface biotinylation experiments showed that receptors can also be palmitoylated once they have reached the plasma membrane. At this location, palmitoylation is regulated in a receptor activation-dependent manner, as was indicated by the opioid agonist-promoted increase in the turnover of receptor-bound palmitate. This agonist-mediated effect did not require receptor-G protein coupling and occurred at the cell surface without the need for internalization or recycling. The activation-dependent modulation of receptor palmitoylation may thus contribute to the regulation of receptor function at the plasma membrane.