The enzymology of palmitate addition to lipid A can be traced to the early discovery of monosaccharide lipid A precursors, but the functional importance of lipid A palmitoylation in bacterial resistance to the host immune response has emerged only recently. Lipid A palmitoylation in enterobacteria is determined by a PhoP/PhoQ-activated gene pagP, which encodes an unusual outer membrane enzyme of lipid A biosynthesis. PagP structure and dynamics have now been elucidated by both NMR spectroscopy and X-ray crystallography. PagP is an 8-stranded antiparallel beta-barrel preceded by an N-terminal amphipathic alpha-helix. The PagP barrel axis is uniquely tilted by 30 degrees with respect to the membrane normal. An interior hydrophobic pocket in the upper half of the molecule functions as a hydrocarbon ruler, which allows the enzyme to distinguish palmitate from other acyl chains found in phospholipids. Internalization of a phospholipid palmitoyl group within the barrel appears to occur by lateral diffusion from the outer leaflet through non-hydrogen bonded regions between beta-strands. The MsbA-dependent trafficking of lipids from the inner membrane to the outer membrane outer leaflet is necessary for lipid A palmitoylation in vivo. Efforts to determine the PagP catalytic mechanism may lead to the development of inhibitors for the treatment of infections.