A cycle of palmitoylation/depalmitoylation of H-Ras mediates bidirectional trafficking between the Golgi apparatus and the plasma membrane, but nothing is known about how this cycle is regulated. We show that the prolyl isomerase (PI) FKBP12 binds to H-Ras in a palmitoylation-dependent fashion and promotes depalmitoylation. A variety of inhibitors of the PI activity of FKBP12, including FK506, rapamycin, and cycloheximide, increase steady-state palmitoylation. FK506 inhibits retrograde trafficking of H-Ras from the plasma membrane to the Golgi in a proline 179-dependent fashion, augments early GTP loading of Ras in response to growth factors, and promotes H-Ras-dependent neurite outgrowth from PC12 cells. These data demonstrate that FKBP12 regulates H-Ras trafficking by promoting depalmitoylation through cis-trans isomerization of a peptidyl-prolyl bond in proximity to the palmitoylated cysteines.