Localization of the death receptor Fas to specialized membrane microdomains is crucial to Fas-mediated cell death signaling. Here, we report that the post-translational modification of Fas by palmitoylation at the membrane proximal cysteine residue in the cytoplasmic region is the targeting signal for Fas localization to lipid rafts, as demonstrated in both cell-free and living cell systems. Palmitoylation is required for the redistribution of Fas to actin cytoskeleton-linked rafts upon Fas stimulation and for the raft-dependent, ezrin-mediated cytoskeleton association, which is necessary for the efficient Fas receptor internalization, death-inducing signaling complex assembly and subsequent caspase cascade leading to cell death.