ATP-binding cassette transporter (ABC)A1 lipidates apolipoprotein A-I both directly at the plasma membrane and also uses lipids from the late endosomal or lysosomal compartment in the internal lipidation of apolipoprotein A-I. However, how ABCA1 targeting to these specific membranes is regulated remains unknown. Palmitoylation is a dynamically regulated lipid modification that targets many proteins to specific membrane domains. We hypothesized that palmitoylation may also regulate ABCA1 transport and function. Indeed, ABCA1 is robustly palmitoylated at cysteines 3, -23, -1110, and -1111. Abrogation of palmitoylation of ABCA1 by mutation of the cysteines results in a reduction of ABCA1 localization at the plasma membranes and a reduction in the ability of ABCA1 to efflux lipids to apolipoprotein A-I. ABCA1 is palmitoylated by the palmitoyl transferase DHHC8, and increasing DHHC8 protein results in increased ABCA1-mediated lipid efflux. Thus, palmitoylation regulates ABCA1 localization at the plasma membrane, and regulates its lipid efflux ability.