The p21 proteins of ras oncogenes are synthesized as precursors in the cytosol. After processing, which involves acylation, the products are associated with the plasma membrane in eucaryotic cells. The p21 overproduced in Escherichia coli, however, is not processed by acylation. A synthetic tetrapeptide of the p21 C terminus is used to identify the acylation site in eucaryotic p21 as cysteine-186. The same peptide of bacterial p21 is not acylated. Although p21 of Harvey murine sarcoma virus-transformed NRK cells can be metabolically labeled with either [3H]palmitate or [3H]myristate, the lipid moiety of the hydrophobic peptide is identified as palmitic acid. We suggest that the enzymatic mechanism for p21 palmitylation may be different from N-terminal myristylation of many other membrane proteins.