Tetramers of the mammalian water channel aquaporin-4 (AQP4) assemble into square arrays and mediate bidirectional water transport across the blood-brain interface. The aqp4 gene expresses two splicing isoforms. Only the shorter AQP4M23 isoform assembles into square arrays, while the longer AQP4M1 isoform interferes with array formation, presumably due to the additional 22 N-terminal residues. To understand why the N-terminus of AQP4M1 interferes with array formation, we constructed a series of N-terminal deletion mutants and examined their ability to form square arrays in Chinese hamster ovary (CHO) cells using SDS-digested freeze fracture replica labeling. Mutants with deletions of less than seventeen N-terminal residues did not form square arrays and showed dispersed immunogold labels against AQP4 molecules, whereas more deletions led to the formation of square arrays labeled with immunogolds. Furthermore, mutagenic substitution of the two cysteine residues at the position 13 and 17 in the N-terminus of AQP4M1 also resulted in the square array formation. Biochemical analysis and metabolic labeling of transfected CHO cells revealed that the two N-terminal cysteines of AQP4M1 are palmitoylated. These results suggest that palmitoylation of the N-terminal cysteines is the reason for the inability of AQP4M1 to form square arrays.