Mutations in the retinitis pigmentosa protein gene RP2 account for up to 15% of X-linked retinitis pigmentosa. RP2 is a novel protein of unknown function, which is targeted to the plasma membrane by dual N-terminal acyl-modification. Dual-acylated proteins are targeted to lipid rafts, and some are subject to polarized sorting. Therefore we investigated the organization of RP2 on the plasma membrane. Endogenous RP2 protein was predominantly localized at the plasma membrane, and exogenously expressed green-fluorescent-protein-tagged protein was also targeted to the membrane in a wide range of cultured cells. High levels of endogenous RP2 protein were present in HeLa cells and in the retinal pigment epithelium-derived cell line ARPE19. A significant proportion of RP2 in cultured neuroblastoma cells was associated with detergent-resistant membranes (DRMs), but much less than other dually acylated proteins (e.g. Lyn and Fyn). In contrast, the RP2-interacting protein Arl3 (ADP-ribosylation factor-like 3) was not found to be associated with DRMs. The association of RP2 with DRMs was cholesterol-dependent. In polarized epithelial cells in culture and in vivo, RP2 was present in both the apical and basolateral domains of the plasma membrane. These data show that RP2 is not specific to either domain, unlike some other dually acylated proteins. Interestingly, the level of RP2 protein increased in the epithelial cell line Caco-2 with differentiation and polarization. These data show that RP2 is present on the membrane of all cell types examined both in vitro and in vivo, and that RP2 associates with lipid rafts, suggesting a potential role for the protein in signal transduction.