To establish the biological function of thioacylation (palmitoylation), we have studied the heterotrimeric guanine nucleotide-binding protein (G protein) subunits of the pheromone response pathway of Saccharomyces cerevisiae. The yeast G protein gamma subunit (Ste18p) is unusual among G(gamma) subunits because it is farnesylated at cysteine 107 and has the potential to be thioacylated at cysteine 106. Substitution of either cysteine results in a strong signaling defect. In this study, we found that Ste18p is thioacylated at cysteine 106, which depended on prenylation of cysteine 107. Ste18p was targeted to the plasma membrane even in the absence of prenylation or thioacylation. However, G protein activation released prenylation- or thioacylation-defective Ste18p into the cytoplasm. Hence, lipid modifications of the G(gamma) subunit are dispensable for G protein activation by receptor, but they are required to maintain the plasma membrane association of G(betagamma) after receptor-stimulated release from G(alpha). The G protein alpha subunit (Gpa1p) is tandemly modified at its N terminus with amide- and thioester-linked fatty acids. Here we show that Gpa1p was thioacylated in vivo with a mixture of radioactive myristate and palmitate. Mutation of the thioacylation site in Gpa1p resulted in yeast cells that displayed partial activation of the pathway in the absence of pheromone. Thus, dual lipidation motifs on Gpa1p and Ste18p are required for a fully functional pheromone response pathway.