Recent studies suggest that a cycle of acylation/deacylation is involved in the vesicular transport of proteins between intracellular compartments at both the budding and the fusion stage (Glick, B. S., and J. E. Rothman. 1987. Nature (Lond.). 326:309-312). Since a number of cellular processes requiring vesicular transport are inhibited during mitosis, we examined the fatty acylation of proteins in interphase and mitotic cells. We have identified a major palmitoylated protein with an apparent molecular weight of 62,000 (p62), whose level of acylation increases 5-10-fold during mitosis. Acylation was reversible and p62 was no longer palmitoylated in cells that have exited mitosis and entered G1. p62 is tightly bound to the cytoplasmic side of membranes, since it was sensitive to digestion with proteases in the absence of detergent and was not removed by treatment with 1 M KCl. p62 is removed from membranes by nonionic detergents or concentrations of urea greater than 4 M. The localization of p62 by subcellular fractionation is consistent with it being in the cis-Golgi or the cis-Golgi network. A palmitoylated protein of the same molecular weight was also observed in interphase cells treated with inhibitors of intracellular transport, such as brefeldin A, monensin, carbonylcyanide m-chlorophenylhydrazone, or aluminum fluoride. The protein palmitoylated in the presence of brefeldin A was shown to be the same as that palmitoylated during mitosis using partial proteolysis. Digestion with two enzymes, alkaline protease and endoprotease lys-C, generated the same 3H-palmitate-labeled peptide fragments from p62 from mitotic or brefeldin A-treated cells. We suggest that the acylation and deacylation of p62 may be important in vesicular transport and that this process may be regulated during mitosis.