The effective delivery of therapeutic proteins to the site of action is of great importance in achieving an effective therapy. Due to hydrophilicity, proteins are generally poorly transported across biological membranes. Chemical acylation represents one of the basic methods for improving their membrane permeability. A novel method for acylation is presented, based on the formation of palmitoylchloride dispersion in aqueous acetonitrile solution, using chicken cystatin as a model protein. We examined the effects of palmitoylchloride/cystatin molar ratio, reaction pH and introduction of successive palmitoylation cycles on the protein modification degree. The reaction products were analysed by capillary electrophoresis and SDS-PAGE, and the in vitro inhibitory activity was determined by N-benzoyl-D,L-arginine-beta-naphthylamide assay. Using cell culture-based assays, we examined the transport properties of unmodified and palmitoylated cystatin, its efficiency to inhibit intracellular enzymes, and its cytotoxicity. We demonstrated that palmitoylated cystatin rapidly internalized into the cell and caused a complete loss of cathepsin B activity. In contrast, the unmodified control cystatin was unable to inhibit the intracellular enzymes. These results strongly suggest protein palmitoylation to be a very effective strategy for improving cell internalization.