Membranes of neuroblastoma N1E-115 cells contain a specific protein carboxyl methyltransferase that methylates a 70 kD protein and a group of 21-23 kD proteins which are tightly bound to the membranes. The enzyme catalyzes the transfer of [methyl-3H] groups from [methyl-3H]S-adenosyl-l-methionine (Km = 0.22 μM) to these proteins to form base-labile carboxymethylesters. These protein methylesters are relatively stable compared to other protein methylesters, as shown by the ability of the 21-23 kD methylated proteins to retain their [methyl-3H] groups at pH values of 7 to 8.5 for at least 12 hr at room temperature. The extent of methylation of the 21-23 kD proteins, but not that of the 70 kD protein, was increased in membranes of cells induced to differentiate by 2% dimethyl sulfoxide (from a basal level of 0.1-0.2 to 0.9-1.2 pmol [methyl-3H] groups incorporated per mg membrane protein). This increase appeared after a lag period of 3 days of growth in the presence of the dimethyl sulfoxide and developed in parallel with the appearance of neurite-like processes in the cells. Kinetic experiments suggest that the amounts of 21-23 kD proteins available for methylation in the membranes of the undifferentiated and of the differentiated cells are limited. This and the previously observed low turnover of methylated 21-23 kD proteins in the intact cells suggest that the differentiated cells express and methylate more 21-23 kD proteins than the undifferentiated cells. These methylated proteins may be involved in differentiation or other functions of the differentiated cell membranes.