The hepatic asialoglycoprotein receptor (ASGP-R) internalizes desialylated glycoproteins via the clathrin-coated pit pathway and mediates their delivery to lysosomes for degradation. The human ASGP-R contains two subunits, H1 and H2. Cytoplasmic residues Cys(36) in H1, as well as Cys(54) and Cys(58) in H2 are palmitoylated (Zeng, F.-Y., and Weigel, P. H. (1996) J. Biol. Chem. 271, 32454). In order to study the function(s) of ASGP-R palmitoylation, we mutated these Cys residues to Ser and generated stably transfected SK-Hep-1 cell lines expressing either wild-type or nonpalmitoylated ASGP-Rs. Compared with wild-type ASGP-Rs, palmitoylation-defective ASGP-Rs showed normal ligand binding, intracellular distribution and trafficking patterns, and pH-induced dissociation profiles in vitro. However, continuous ASOR uptake, and the uptake of prebound cell surface ASOR were slower in cells expressing palmitoylation-defective ASGP-Rs than in cells expressing wild-type ASGP-Rs. Unlike native ASGP-Rs in hepatocytes or hepatoma cells, which mediate endocytosis via the clathrin-coated pit pathway and are almost completely inhibited by hypertonic medium, only approximately 40% of the ASOR uptake in SK-Hep-1 cells expressing wild-type ASGP-Rs was inhibited by hyperosmolarity. This result suggests the existence of an alternate nonclathrin-mediated internalization pathway, such as transcytosis, for the entry of ASGP-R.ASOR complexes into these cells. In contrast, ASOR uptake mediated by cells expressing palmitoylation-defective ASGP-Rs showed only a marginal difference under hypertonic conditions, indicating that most of the nonpalmitoylated ASGP-Rs were not internalized and processed normally through the clathrin-coated pit pathway. Furthermore, cells expressing wild-type ASGP-Rs were able to degrade the internalized ASOR, whereas ASOR dissociation was impaired and degradation was barely detectable in cells expressing nonpalmitoylated ASGP-Rs. We conclude that palmitoylation of the ASGP-R is required for its efficient endocytosis of ligand by the clathrin-dependent endocytic pathway and, in particular, for the proper dissociation and delivery of ligand to lysosomes.