The neurotransmitter GABA activates heteropentameric GABA_Areceptors, which are composed mostly of α, β, and γ2 subunits. Regulated membrane trafficking and subcellular targeting of GABA_Areceptors is important for determining the efficacy of GABAergic inhibitory function. Of special interest is the γ2 subunit, which is mostly dispensable for assembly and membrane insertion of functional receptors but essential for accumulation of GABA_Areceptors at synapses. In a search for novel receptor trafficking proteins, we have used the SOS-recruitment system and isolated a Golgi-specific DHHC zinc finger protein (GODZ) as a novel γ2 subunit-interacting protein. GODZ is a member of the superfamily of DHHC cysteine-rich domain (DHHC-CRD) polytopic membrane proteins shown recently in yeast to represent palmitoyltransferases. GODZ mRNA is found in many tissues; however, in brain the protein is detected in neurons only and highly concentrated and asymmetrically distributed in the Golgi complex. GODZ interacts with a cysteine-rich 14-amino acid domain conserved specifically in the large cytoplasmic loop of γ1-3 subunits but not in other GABA_Areceptor subunits. Coexpression of GODZ and GABA_Areceptors in heterologous cells results in palmitoylation of the γ2 subunit in a cytoplasmic loop domain-dependent manner. Neuronal GABA_Areceptors are similarly palmitoylated. Thus, GODZ-mediated palmitoylation represents a novel posttranslational modification that is selective forγ subunit-containing GABA_Areceptor subtypes, a mechanism that is likely to be important for regulated trafficking of these receptors in the secretory pathway.