Protein S-acylation, commonly known as protein palmitoylation, is the most prevalent form of protein lipidation with ∼6000 target proteins and in humans, is catalyzed by 23 integral membrane enzymes of the zDHHC family. Recognition of its importance in cellular physiology as well as human diseases has undergone an explosive growth in recent years. Yet, the nature of zDHHC-substrate interactions has remained poorly understood for most zDHHC enzymes. Cell-based experiments indicate a promiscuous and complex zDHHC-substrate network whereas lack of in vitro reconstitution experiments has impeded insights into the nature of discrete zDHHC-substrate interactions. Here we report a substrate S-acylation reconstitution assay, called the Pep-PAT assay, using purified enzyme and peptide fragments of substrates. We use the Pep-PAT assay to investigate the substrate S-acylation of three different zDHHC enzymes on seven different substrates. Remarkably, all the zDHHC enzymes showed robust activity with certain substrates but not others. These in vitro reconstitution experiments indicate that there is a preferred substrate hierarchy for zDHHC enzymes. We further used the Pep-PAT assay to interrogate the role of neighboring residues around the target cysteine on S-acylation of PSD-95 and SARS-CoV-2 Spike protein. Select residues around the target cysteines have distinct impact on substrate S-acylation, leading to the first insights into how neighboring residues around the target cysteine affect substrate S-acylation by zDHHC enzymes. Finally, we validated the impact of neighboring residues on substrate S-acylation using in cellulo assays. Our experiments build a framework for understanding substrate S-acylation by zDHHC enzymes.