Type I interferons (IFNs) bind IFNAR receptors and activate Jak kinases and Stat transcription factors to stimulate the transcription of genes downstream from IFN-stimulated response elements. In this study, we analyze the role of protein palmitoylation, a reversible post-translational lipid modification, in the functional properties of IFNAR. We report that pharmacological inhibition of protein palmitoylation results in severe defects of IFN receptor endocytosis and signaling. We generated mutants of the IFNAR1 subunit of the type I IFN receptor, in which each or both of the two cysteines present in the cytoplasmic domain are replaced by alanines. We show that cysteine 463 of IFNAR1, the more proximal of the two cytoplasmic cysteines, is palmitoylated. A thorough microscopic and biochemical analysis of the palmitoylation-deficient IFNAR1 mutant revealed that IFNAR1 palmitoylation is not required for receptor endocytosis, intracellular distribution, or stability at the cell surface. However, the lack of IFNAR1 palmitoylation affects selectively the activation of Stat2, which results in a lack of efficient Stat1 activation and nuclear translocation and IFN-alpha-activated gene transcription. Thus, receptor palmitoylation is a previously undescribed mechanism of regulating signaling activity by type I IFNs in the Jak/Stat pathway.