Proteolipid protein (PLP), the major integral membrane protein of central nervous system myelin, contains 14 cysteine residues within its 276-residue polypeptide chain. We determined the state of all cysteine residues and localized four of them as free thiols at positions 24, 32, 34, and 168. Four cysteines are connected by disulfide bonds: Cys200-Cys219 and Cys183-Cys227. The remaining six cysteine residues at positions 5, 6, 9, 108, 138, and 140 are modified by long-chain fatty acids, mainly palmitic acid, in thioester linkage. The extreme hydrophobicity of PLP can therefore be explained by two structural features: a composition of approximately 50% apolar amino acid residues and a high degree of fatty acid acylation. A differential fluorescent-labeling technique was developed for the structural studies: the cysteine residues belonging to one of the three states were derivatized by N-(iodoacetylaminoethyl)-5-naphthylamine-1-sulfonic acid (I-AEDANS) either directly (a), after thioester cleavage with hydroxylamine (b), or after disulfide cleavage with dithiothreitol (c). The protein was then proteolytically digested with thermolysin, and the labeled peptides were isolated by reversed-phase HPLC followed by sequence analysis. The results were further confirmed by determination of the fatty acid to protein stoichiometry. The structural data not only demand the revision of our concept of the membrane topology of PLP but will also promote more sophisticated studies on the mechanism of myelination and new functions of PLP.