Palmitoyl acyltransferase that catalyzes N-terminal palmitoylation of SHH; which is required for SHH signaling during limb development (PubMed:15075292). It also catalyzes N-terminal palmitoylation of DHH (By similarity). Promotes the transfer of palmitoyl-CoA from the cytoplasmic to the luminal side of the endoplasmic reticulum membrane, where SHH palmitoylation occurs (By similarity). Plays a role in proper testis cord formation and the differentiation of Leydig cells (PubMed:24784881). hexadecanoyl-CoA + N-terminal L-cysteinyl-[protein] = CoA + H(+) + N-terminal N-hexadecanoyl-L-cysteinyl-[protein] hexadecanoyl-CoA + N-terminal L-cysteinyl-[protein]-C-terminal glycyl cholesterol ester = CoA + H(+) + N-terminal N-hexadecanoyl-L-cysteinyl-[protein]-C-terminal glycyl cholesterol ester Co-localizes with SHH in the ER and Golgi membrane. Broadly expressed from 7 dpc. At 10.5 dpc, strongly expressed in anterior ectoderm, pharyngeal arches, and distal part of the limb. Conditional knockout embryos are characterized by a smaller size and holoprosencephaly at 10.5 dpc, shortening of limbs at 13.5 dpc, and severe short-limb dwarfism at birth. They die soon after birth. Testicular development is significantly impaired in XY embryos by 12.5 dpc. There is a massive reduction in testis size, a reduction in the number of testis cords which are irregular in shape and diameter, and an almost complete absence of Leydig cells (PubMed:24784881). Belongs to the membrane-bound acyltransferase family. HHAT subfamily.