Palmitoylation of integral membrane proteins can affect intracellular trafficking, protein-protein interactions and protein stability. The goal of the present study was to determine whether claudins, transmembrane-barrier-forming proteins of the tight junction, are palmitoylated and whether this modification has functional implications for the tight-junction barrier. Claudin-14, like other members of the claudin family, contains membrane-proximal cysteines following both the second and the fourth transmembrane domains, which we speculated could be modified by S-acylation with palmitic acid. We observed that [3H]-palmitic acid was incorporated into claudin-14 expressed by transfection in both cultured epithelial cells and fibroblasts. Mutation of cysteines to serines following either the second or the fourth transmembrane segments decreased the incorporation of [3H]-palmitic acid, and mutation of all four cysteines eliminated palmitoylation. We previously reported that expression of claudin-14 in epithelial monolayers results in a fivefold increase in electrical resistance. By contrast, expression of the mutant claudin-14 resulted in smaller increases in resistance. The mutants localized less well to tight junctions and were also found in lysosomes, suggesting an alteration in trafficking or stability. However, we observed no change in protein half-life and only a small shift in fractionation out of caveolin-enriched detergent-resistant membranes. Although less well localized to the tight junction, palmitoylation-deficient claudin-14 was still concentrated at sites of cell-cell contact and was competent to assemble into freeze-fracture strands when expressed in fibroblasts. These results demonstrate that palmitoylation of claudin-14 is required for efficient localization into tight junctions but not stability or strand assembly. Decreased ability of the mutants to alter resistance is probably the result of their less efficient localization into the barrier.