DHHC protein acyltransferases (PATs) catalyze the palmitoylation of eukaryotic proteins through an enzymatic mechanism that remains largely unexplored. In this study we have combined genetic and biochemical approaches to examine the molecular mechanism of palmitate transfer of the yeast Ras PAT, which is composed of Erf2 and Erf4. The palmitoylation reaction consists of two steps; they are autopalmitoylation of the enzyme to create a palmitoyl-Erf2 intermediate followed by the transfer of the palmitoyl moiety to the Ras substrate. Palmitoyl-CoA serves as the palmitate donor. To elucidate the kinetic properties of the Erf2·Erf4 PAT, we have developed a coupled enzyme assay that monitors the turnover of the palmitoyl-enzyme species indirectly by measuring the rate of CoASH release. Mutational analysis indicates that the DHHC motif constitutes the catalytic core of the enzyme required for autopalmitoylation and palmitoyl transfer to the Ras2 substrate. In the absence of Ras2, the palmitoyl-Erf2·Erf4 complex undergoes a cycle of hydrolysis and re-palmitoylation, implying that in the presence of palmitoyl-CoA, the complex is autopalmitoylated and competent to transfer palmitate to a protein substrate.