R7BP (RGS7 family-binding protein) has been proposed to function in neurons as a palmitoylation-regulated protein that shuttles heterodimeric, G(i/o)α-specific GTPase-activating protein (GAP) complexes composed of Gβ5 and RGS7 (R7) isoforms between the plasma membrane and nucleus. To test this hypothesis we studied R7BP palmitoylation and localization in neuronal cells. We report that R7BP undergoes dynamic, signal-regulated palmitate turnover; the palmitoyltransferase DHHC2 mediates de novo and turnover palmitoylation of R7BP; DHHC2 silencing redistributes R7BP from the plasma membrane to the nucleus; and G(i/o) signaling inhibits R7BP depalmitoylation whereas G(i/o) inactivation induces nuclear accumulation of R7BP. In concert with previous evidence, our findings suggest that agonist-induced changes in palmitoylation state facilitate GAP action by (i) promoting Giα depalmitoylation to create optimal GAP substrates, and (ii) inhibiting R7BP depalmitoylation to stabilize membrane association of R7-Gβ5 GAP complexes. Regulated palmitate turnover may also enable R7BP-bound GAPs to shuttle between sites of low and high G(i/o) activity or the plasma membrane and nucleus, potentially providing spatio-temporal control of signaling by G(i/o)-coupled receptors.