PMP22 (peripheral myelin protein 22), also known as GAS 3 (growth-arrest-specific protein 3), is a disease-linked tetraspan glycoprotein of peripheral nerve myelin and constituent of intercellular junctions in epithelia. To date, our knowledge of the post-translational modification of PMP22 is limited. Using the CSS-Palm 2.0 software we predicted that C85 (cysteine 85), a highly conserved amino acid located between the second and third transmembrane domains, is a potential site for palmitoylation. To test this, we mutated C85S (C85 to serine) and established stable cells lines expressing the WT (wild-type) or the C85S-PMP22. In Schwann and MDCK (Madin-Darby canine kidney) cells mutating C85 blocked the palmitoylation of PMP22, which we monitored using 17-ODYA (17-octadecynoic acid). While palmitoylation was not necessary for processing the newly synthesized PMP22 through the secretory pathway, overexpression of C85S-PMP22 led to pronounced cell spreading and uneven monolayer thinning. To further investigate the functional significance of palmitoylated PMP22, we evaluated MDCK cell migration in a wound-healing assay. While WT-PMP22 expressing cells were resistant to migration, C85S cells displayed lamellipodial protrusions and migrated at a similar rate to vector control. These findings indicate that palmitoylation of PMP22 at C85 is critical for the role of the protein in modulating epithelial cell shape and motility.