A well known function of palmitoylation is to promote protein binding to cell membranes. Until recently, it was unclear what additional roles, if any, palmitoylation has in controlling protein localization in cells. Recent studies of palmitoylated forms of the small GTPase Ras have now revealed that palmitoylation plays multiple roles in the regulation of protein trafficking, including targeting proteins into the secretory pathway and recycling proteins between the plasma membrane and Golgi complex. We here describe how quantitative fluorescence microscopy and photobleaching approaches can be used to study the intracellular targeting and trafficking of GFP-tagged palmitoylated proteins in living cells. We discuss (1) general considerations for fluorescence recovery after photobleaching (FRAP) measurements of GFP-tagged proteins; (2) FRAP-based assays to test the strength of binding of palmitoylated proteins to cell membranes; (3) methods to establish the kinetics and mechanisms of recycling of palmitoylated proteins between the Golgi complex and the plasma membrane; (4) the use of the palmitoylation inhibitor 2-bromo-palmitate as a tool to study the dynamic regulation of protein targeting and trafficking by palmitate turnover.