Rho and Rab family GTPases play a key role in cytoskeletal organization and vesicular trafficking, but the exact mechanisms by which these GTPases regulate polarized cell growth are incompletely understood. A previous screen for genes that interact with CDC42, which encodes a Rho GTPase, found SWF1/PSL10. Here, we show Swf1p, a member of the DHHC-CRD family of palmitoyltransferases, localizes to actin cables and cortical actin patches in Saccharomyces cerevisiae. Deletion of SWF1 results in misorganization of the actin cytoskeleton and decreased stability of actin filaments in vivo. Cdc42p localization depends upon Swf1p primarily after bud emergence. Importantly, we revealed that the actin regulating activity of Swf1p is independent of its DHHC motif. A swf1 mutant, in which alanine substituted for the cysteine required for the palmitoylation activity of DHHC-CRD proteins, displayed wild-type actin organization and Cdc42p localization. Bgl2p-marked exocytosis was found wild type in this mutant, although invertase secretion was impaired. These data indicate Swf1p has at least two distinct functions, one of which regulates actin organization and Bgl2p-marked secretion. This report is the first to link the function of a DHHC-CRD protein to Cdc42p and the regulation of the actin cytoskeleton.