H-Ras, the protein product of the cellular homologue of the Harvey ras oncogene, undergoes a complex series of post-translational modifications that include C-terminal isoprenylation, proteolysis, methylation, and palmitoylation. Palmitoylation has been shown to enhance the transformation efficiency of H-Ras about 10-fold in vivo. A recent study (Magee, A. I., Gutierrez, L., McKay, I. A., Marshall, C. J., and Hall, A. (1987) EMBO J. 6, 3353-3357) has provided strong evidence that the palmitate undergoes a dynamic acylation-deacylation cycle, but details concerning the enzymology of this process and its regulation are lacking. To begin to dissect this event, we have developed an assay for the enzymatic removal of palmitate from [3H]palmitate-labeled H-Ras. This substrate was produced in a baculovirus expression system and was used to purify to homogeneity a novel 37-kDa enzyme from bovine brain cytosol that removes the radiolabeled palmitate. The purified enzyme is sensitive to diethyl pyrocarbonate and insensitive to phenylmethylsulfonyl fluoride and N-ethylmaleimide. Interestingly, the thioesterase recognizes H-Ras as a substrate only when H-Ras is in its native conformation (bound to Mg2+ and guanine nucleotide). The palmitoylated alpha subunits of the heterotrimeric G proteins are also substrates for the enzyme.