The myelination-related enzyme 2',3'-cyclic nucleotide 3'-phosphodiesterase (CNP), a relatively abundant protein in the CNS possesses the C-terminal isoprenylation consensus domain found in a small family that includes the ras oncoproteins and their relatives, some G-proteins, and nuclear lamins. We found that CNP, like these other proteins, is modified posttranslationally by an isoprenoid derived from mevalonic acid. It appears that only the smaller of the two CNP isoforms (CNP1) is isoprenylated, but similar modification of CNP2 cannot be excluded. Inhibition of isoprenoid synthesis by Lovastatin blocks the binding of newly synthesized CNP to cell membranes; binding is restored upon addition of mevalonate to the culture medium. This shows that isoprenylation is permissive for the well-known avid association of CNP with membranes.