Protein palmitoylation represents an important mechanism governing the dynamic subcellular localization of many signaling proteins. Palmitoylation of endothelial nitric-oxide synthase (eNOS) promotes its targeting to plasmalemmal caveolae; agonist-promoted depalmitoylation leads to eNOS translocation. Depalmitoylation and translocation of eNOS modulate the agonist response, but the pathways that regulate eNOS palmitoylation and depalmitoylation are poorly understood. We now show that the newly characterized acyl-protein thioesterase 1 (APT1) regulates eNOS depalmitoylation. Immunoblot analyses indicate that APT1 is expressed in bovine aortic endothelial cells, which express eNOS. APT1 overexpression appears to accelerate the depalmitoylation of eNOS in COS-7 cells cotransfected with eNOS and APT1 cDNAs. Additionally, purified recombinant APT1 depalmitoylates eNOS assayed in biological membranes isolated from endothelial cells biosynthetically labeled with [(3)H]palmitate or COS-7 cells transfected with eNOS cDNA. More important, the APT1-catalyzed depalmitoylation of palmitoyl-eNOS is potentiated by Ca(2+)-calmodulin (CaM), a key allosteric activator of eNOS. In contrast, APT1-catalyzed depalmitoylation of the G protein Galpha(s) is unaffected by Ca(2+)-CaM. Furthermore, caveolin, a palmitoylated membrane protein, does not appear to be a substrate for APT1. Taken together, these results support a role for APT1 in the regulation of eNOS depalmitoylation and suggest that Ca(2+)-CaM activation of eNOS renders the enzyme more susceptible to APT1-catalyzed depalmitoylation.