The enzyme acyl-CoA:lysophosphatidylcholine acyltransferase (Lpcat1) is a critical cytosolic enzyme needed for lung surfactant synthesis that catalyzes an acyltransferase reaction by adding a palmitate to the sn-2 position of lysophospholipids. Here we report that histone H4 protein is subject to palmitoylation catalyzed by Lpcat1 in a calcium-regulated manner. Cytosolic Lpcat1 was observed to shift into the nucleus in lung epithelia in response to exogenous Ca(2+). Nuclear Lpcat1 colocalizes with and binds to histone H4, where it catalyzes histone H4 palmitoylation. Mutagenesis studies demonstrated that Ser(47) within histone H4 serves as a putative acceptor site, indicative of Lpcat1-mediated O-palmitoylation. Lpcat1 knockdown or expression of a histone H4 Ser(47A) mutant protein in cells decreased cellular mRNA synthesis. These findings provide the first evidence of a protein substrate for Lpcat1 and reveal that histone lipidation may occur through its O-palmitoylation as a novel post-translational modification. This epigenetic modification regulates global gene transcriptional activity.