Posttranslational S-fatty acylation (or S-palmitoylation) modulates protein localization and functions, and has been implicated in neurological, metabolic, and infectious diseases, and cancers. Auto-S-fatty acylation involves reactive cysteine residues in the proteins which directly react with fatty acyl-CoA through thioester transfer reactions, and is the first step in some palmitoyl acyltransferase (PAT)-mediated catalysis reactions. In addition, many structural proteins, transcription factors and adaptor proteins might possess such “enzyme-like” activities and undergo auto-S-fatty acylation upon fatty acyl-CoA binding. Auto-S-fatty acylated proteins represent a new class of potential drug targets, which often harbor lipid-binding hydrophobic pockets and reactive cysteine residues, providing potential binding sites for covalent and non-covalent modulators. Therefore, targeting auto-S-fatty acylation could be a promising avenue to pharmacologically intervene in important cellular signaling pathways. Here, we summarize the recent progress in understanding the regulation and functions of auto-S-fatty acylation in cell signaling and diseases. We highlight the druggability of auto-S-fatty acylated proteins, including PATs and other proteins, with potential in silico and rationalized drug design approaches. We also highlight structural analysis and examples of currently known small molecules targeting auto-S-fatty acylation, to gain insights into targeting this class of proteins, and to expand the “druggable” proteome.