Intracellular palmitoylation dynamics are regulated by a large family of DHHC (Asp-His-His-Cys) palmitoyl transferases. The majority of DHHC proteins associate with endoplasmic reticulum (ER) or Golgi membranes, but an interesting exception is DHHC2, which localizes to dendritic vesicles of unknown origin in neurons, where it regulates dynamic palmitoylation of PSD95. Dendritic targeting of newly synthesized PSD95 is likely preceded by palmitoylation on Golgi membranes by DHHC3 and/or DHHC15. The precise intracellular distribution of DHHC2 is presently unclear, and there is very little known in general about how DHHC proteins achieve their respective localizations. In this study, membrane targeting of DHHC2 in live and fixed neuroendocrine cells was investigated and mutational analysis employed to define regions of DHHC2 that regulate targeting. We report that DHHC2 associates with the plasma membrane, Rab11-positive recycling endosomes, and vesicular structures. Plasma membrane integration of DHHC2 was confirmed by labeling of an extrafacial HA epitope in nonpermeabilized cells. Antibody-uptake experiments suggested that DHHC2 traffics between the plasma membrane and intracellular membranes. This dynamic localization was confirmed using fluorescence recovery after photo-bleaching analysis, which revealed constitutive refilling of the recycling endosome (RE) pool of DHHC2. The cytoplasmic C-terminus of DHHC2 regulates membrane targeting and a mutant lacking this domain was associated with the ER. Although DHHC2 is closely related to DHHC15, these proteins populate distinct membrane compartments. Construction of chimeric DHHC2/DHHC15 proteins revealed that this difference in localization is a consequence of divergent sequences within their C-terminal tails. This study is the first to highlight dynamic cycling of a mammalian DHHC protein between clearly defined membrane compartments, and to identify domains that specify membrane targeting of this protein family.