Recently, mutations in the DNAJC5 gene encoding cysteine-string protein α (CSPα) were identified to cause the neurodegenerative disorder adult-onset neuronal ceroid lipofuscinosis. The disease-causing mutations (L115R or ΔL116) occur within the cysteine-string domain, a region of the protein that is post-translationally modified by extensive palmitoylation. Here we demonstrate that L115R and ΔL116 mutant proteins are mistargeted in neuroendocrine cells and form SDS-resistant aggregates, concordant with the properties of other mutant proteins linked to neurodegenerative disorders. The mutant aggregates are membrane-associated and incorporate palmitate. Indeed, co-expression of palmitoyltransferase enzymes promoted the aggregation of the CSPα mutants, and chemical depalmitoylation solubilized the aggregates, demonstrating that aggregation is induced and maintained by palmitoylation. In agreement with these observations, SDS-resistant CSPα aggregates were present in brain samples from patients carrying the L115R mutation and were depleted by chemical depalmitoylation. In summary, this study identifies a novel interplay between genetic mutations and palmitoylation in driving aggregation of CSPα mutant proteins. We propose that this palmitoylation-induced aggregation of mutant CSPα proteins may underlie the development of adult-onset neuronal ceroid lipofuscinosis in affected families.