Many signaling molecules contain the consensus protein sequence Met-Gly at their N-termini that specifies N-myristoylation. Additionally, some of these proteins contain a cysteine at position-3 (Met-Gly-Cys) that can undergo palmitoylation. As many acylated proteins [G-protein subunits (alpha and beta gamma); c-Src and Src-family tyrosine kinases; H-Ras and Ras-related GTPases; endothelial nitric oxide synthase] are known to be targeted to caveolae membranes, it has been suggested that acylation is required or greatly facilitates this targeting event. However, it remains unclear whether myristoylation of Src-family kinases is necessary or sufficient for caveolar targeting. Our current study aims at clarifying the role of myristoylation in caveolar targeting using well-characterized acylation mutants of two model proteins, namely Gi1 alpha and c-Src. Here, we have used: i) detergent-free subcellular fractionation and ii) acylation mutants of Gi1 alpha and c-Src to systematically evaluate the relative contribution of myristoylation and palmitoylation to their caveolar targeting. Myristoylation (G2A) and palmitoytation (C3S) mutants of Gi1 alpha were poorly targeted to caveolae-enriched membrane fractions, while approximately 35% of total wild-type Gi1 alpha co-fractionated with caveolin, a caveolar marker protein. Similarly, a myristoylation minus mutant of c-Src was quantitatively excluded from caveolae. In contrast to a previous study, we conclude that myristoylation of Gi1 alpha and c-Src proteins is required for their correct caveolar targeting. However, the caveolar targeting of Gi1 alpha is dramatically augmented approximately 4-fold by palmitoylation. Our current studies are directly supported by the earlier in vivo observation that N-terminal myristoylation of v-Src is required for v-Src to phosphorylate caveolin on tyrosine residues in intact cells.