The P2X7 receptor (P2X7R) is an ATP-gated cationic channel expressed by hematopoietic, epithelial, and neuronal cells. Prolonged ATP exposure leads to the formation of a nonselective pore, which can result in cell death. We show that P2X7R is associated with detergent-resistant membranes (DRMs) in both transfected human embryonic kidney (HEK) cells and primary macrophages independently from ATP binding. The DRM association requires the posttranslational modification of P2X7R by palmitic acid. Treatment of cells with the palmitic acid analog 2-bromopalmitate as well as mutations of cysteine to alanine residues abolished P2X7R palmitoylation. Substitution of the 17 intracellular cysteines of P2X7R revealed that 4 regions of the carboxyl terminus domain are involved in palmitoylation. Palmitoylation-defective P2X7R mutants showed a dramatic decrease in cell surface expression because of their retention in the endoplasmic reticulum and proteolytic degradation. Taken together, our data demonstrate that P2X7R palmitoylation plays a critical role in its association with the lipid microdomains of the plasma membrane and in the regulation of its half-life.