As with other lipid modifications of proteins, prenylation now appears to be critically important in the regulation of protein function. Recent research has led to an explosion of information concerning prenylation signals, prenyl transferase enzymes and the role of prenylation in protein-membrane interactions. Experiments have examined the role of prenylation in protein function and the results suggest that protein prenylation may be involved in facilitating proper subcellular localization, promoting protein-protein and protein-membrane interactions and regulating protein function.