The primary translation product (pro-p21) of p2l, which is found in the cytosol, undergoes post-translational modification and the mature protein subsequently became associated with the inner surface of the plasma membrane and binds lipid tightly. We find that p21, overproduced in E. coli, is an equivalent of pro-p21 in mammalian cells. Comparative peptide mapping by high performance liquid chromatography (HPLC) or two-dimensional, thin-layer electrophoresis-chromatography (TLC) between 35S-cysteine labeled p21 from NRK cells transformed by Ha-MuSV and p21 in E. coli has shown direct evidence for p21 palmitylation at the C-terminal tetrapeptide, presumabaly through a thioester linkage with cysteine-186. Although p21 of Ha-MuSV transformed NRK cells can be meabolically labeled with either 3H-palmitate or 3H-myristate, the lipid moiety of the hydrophobic peptide is identified as palmiotic acid. The mechanism of lipidation of p21 proteins appears to be different from N-terminal myristylation observed in p60 src and many other membrane-associated proteins.