Porcine reproductive and respiratory syndrome virus (PRRSV), an enveloped positive-strand RNA virus in the Arteiviridae family, is a major pathogen affecting pigs worldwide. The membrane (glyco)proteins GP5 and M form a disulfide-linked dimer, which is a major component of virions. GP5/M are required for virus budding, which occurs at membranes of the exocytic pathway. Both GP5 and M feature a short ectodomain, three transmembrane regions, and a long cytoplasmic tail, which contains three and two conserved cysteines, respectively, in close proximity to the transmembrane span. We report here that GP5 and M of PRRSV-1 and -2 strains are palmitoylated at the cysteines, regardless of whether the proteins are expressed individually or in PRRSV-infected cells. To completely prevent S-acylation, all cysteines in GP5 and M have to be exchanged. If individual cysteines in GP5 or M were substituted, palmitoylation was reduced, and some cysteines proved more important for efficient palmitoylation than others. Neither infectious virus nor genome-containing particles could be rescued if all three cysteines present in GP5 or both present in M were replaced in a PRRSV-2 strain, indicating that acylation is essential for virus growth. Viruses lacking one or two acylation sites in M or GP5 could be rescued but grew to significantly lower titers. GP5 and M lacking acylation sites form dimers and GP5 acquires Endo-H resistant carbohydrates in the Golgi apparatus suggesting that trafficking of the membrane proteins to budding sites is not disturbed. Likewise, GP5 lacking two acylation sites is efficiently incorporated into virus particles and these viruses exhibit no reduction in cell entry. We speculate that multiple fatty acids attached to GP5 and M in the endoplasmic reticulum are required for clustering of GP5/M dimers at Golgi membranes and constitute an essential prerequisite for virus assembly.