Post-translational palmitoylation of intracellular proteins is mediated by protein palmitoyltransferases belonging to the DHHC family, which share a common catalytic Asp-His-His-Cys (DHHC) motif. Several members have been implicated in neuronal development, neurotransmission, and synaptic plasticity. We previously observed that mice homozygous for a hypomorphic allele of the ZDHHC5 gene are impaired in context-dependent learning and memory. To identify potentially relevant protein substrates of DHHC5, we performed a quantitative proteomic analysis of stable isotope-labeled neuronal stem cell cultures from forebrains of normal and DHHC5-GT (gene-trapped) mice using the bioorthogonal palmitate analog 17-octadecynoic acid. We identified ∼300 17-octadecynoic acid-modified and hydroxylamine-sensitive proteins, of which a subset was decreased in abundance in DHHC5-GT cells. Palmitoylation and oligomerization of one of these proteins (flotillin-2) was abolished in DHHC5-GT neuronal stem cells. In COS-1 cells, overexpression of DHHC5 markedly stimulated the palmitoylation of flotillin-2, strongly suggesting a direct enzyme-substrate relationship. Serendipitously, we found that down-regulation of DHHC5 was triggered within minutes following growth factor withdrawal from normal neural stem cells, a maneuver that is used to induce neural differentiation in culture. The effect was reversible for up to 4 h, and degradation was partially prevented by inhibitors of ubiquitin-mediated proteolysis. These findings suggest that protein palmitoylation can be regulated through changes in DHHC PAT levels in response to differentiation signals.