Oncogenic RAS mutations pose substantial challenges for rational drug discovery. Sequence variations within the hypervariable region of Ras isoforms underlie differential posttranslational modification and subcellular trafficking, potentially resulting in selective vulnerabilities. Specifically, inhibiting the palmitoylation/depalmitoylation cycle is an appealing strategy for treating NRAS mutant cancers, particularly as normal tissues would retain K-Ras4b function for physiologic signaling. The role of endogenous N-Ras^G12D palmitoylation in signal transduction, hematopoietic differentiation, and myeloid transformation is unknown, and addressing these key questions will inform efforts to develop mechanism-based therapies. To evaluate the palmitoylation/depalmitoylation cycle as a candidate drug target in an in vivo disease-relevant model system, we introduced a C181S mutation into a conditional Nras^G12D “knock-in” allele. The C181S second-site amino acid substitution abrogated myeloid transformation by Nras^G12D, which was associated with mislocalization of the nonpalmitoylated N-Ras mutant protein, reduced Raf/MEK/ERK signaling, and alterations in hematopoietic stem and progenitor populations. Furthermore, hematologic malignancies arising in Nras^{G12D/G12D,C181S} compound heterozygous mice invariably acquired revertant mutations that restored cysteine 181. Together, these studies validate the palmitoylation cycle as a promising therapeutic target in NRAS mutant cancers.