Golgi-specific DHHC (Asp-His-His-Cys) zinc finger protein (GODZ) is a DHHC family palmitoyl acyltransferase that is implicated in palmitoylation and regulated trafficking of diverse substrates that function either at inhibitory or excitatory synapses. Of particular interest is the gamma2 subunit of GABA(A) receptors, which is required for targeting these receptors to inhibitory synapses. Here, we report that GODZ and, to a lesser extent, its close paralog sertoli cell gene with a zinc finger domain-beta (SERZ-beta) are the main members of the DHHC family of enzymes that are able to palmitoylate the gamma2 subunit in heterologous cells. Yeast two-hybrid and colocalization assays in human embryonic kidney 293T (HEK293T) cells indicate that GODZ and SERZ-beta show indistinguishable palmitoylation-dependent interaction with the gamma2 subunit. After coexpression in HEK293T cells, they form homomultimers and heteromultimers, as shown by coimmunoprecipitation and in vivo cross-linking experiments. Analyses in neurons transfected with dominant-negative GODZ (GODZ(C157S)) or plasmid-based GODZ-specific RNAi indicate that GODZ is required for normal accumulation of GABA(A) receptors at synapses, for normal whole-cell and synaptic GABAergic inhibitory function and, indirectly, for GABAergic innervation. Unexpectedly, GODZ was found to be dispensable for normal postsynaptic AMPA receptor-mediated glutamatergic transmission. We conclude that GODZ-mediated palmitoylation of GABA(A) receptors and possibly other substrates contributes selectively to the formation and normal function of GABAergic inhibitory synapses.