The catalytic of subunit of cAMP-dependent protein kinase is acylated at its NH2 terminus with myristic acid. This type of modification is thought to mediate the association of proteins with lipid bilayers, yet the catalytic subunit shows no preferential binding with membranes. We investigated the role of C subunit myristylation using a cDNA expression vector in which the acylated NH2-terminal Gly was mutagenized to Ala. Protein synthesized in NIH 3T3 cells from this modified gene did not incorporate [3H]myristate. However, the kinase activity of this altered C subunit on a synthetic substrate was not diminished, nor was its ability to form holoenzyme with regulatory subunit. Non-myristylated C subunit also regulated several biological processes occurring in specific subcellular compartments; mutant C subunit stimulated dramatic cell shape changes controlled by the cytoskeleton, restored steroidogenesis in the mitochondria of defective adrenocortical cells, and effectively induced the transcription of genes in the nucleus. These results suggest that myristylation is nonessential for C subunit conformation and enzyme activation, and is not required for C subunit interaction with other proteins in regions where C is thought to localize upon activation. The purpose for NH2-terminal myristylation of this important signal-transducing enzyme remains an enigma.