Identification of immune effectors and the post-translational modifications that control their activity is essential for dissecting mechanisms of immunity. Here we demonstrate that the antiviral activity of interferon-induced transmembrane protein 3 (IFITM3) is post-translationally regulated by S-palmitoylation. Large-scale profiling of palmitoylated proteins in a dendritic cell line using a chemical reporter strategy revealed over 150 lipid-modified proteins with diverse cellular functions, including innate immunity. We discovered that S-palmitoylation of IFITM3 on membrane-proximal cysteines controls its clustering in membrane compartments and its antiviral activity against influenza virus. The sites of S-palmitoylation are highly conserved among the IFITM family of proteins in vertebrates, which suggests that S-palmitoylation of these immune effectors may be an ancient post-translational modification that is crucial for host resistance to viral infections. The S-palmitoylation and clustering of IFITM3 will be important for elucidating its mechanism of action and for the design of antiviral therapeutics.