Defects in cilia have been associated with an expanding human disease spectrum known as ciliopathies. Regulatory Factor X 3 (RFX3) is one of the major transcription factors required for ciliogenesis and cilia functions. In addition, RFX3 regulates pancreatic islet cell differentiation and mature β-cell functions. However, how RFX3 protein is regulated at the posttranslational level remains poorly understood. Using chemical reporters of protein fatty acylation and mass spectrometry analysis, here we show that RFX3 transcriptional activity is regulated by S-fatty acylation at a highly conserved cysteine residue in the dimerization domain. Surprisingly, RFX3 undergoes enzyme-independent, “self-catalyzed” auto-fatty acylation and displays preferences for 18-carbon stearic acid and oleic acid. The fatty acylation-deficient mutant of RFX3 shows decreased homodimerization; fails to promote ciliary gene expression, ciliogenesis, and elongation; and impairs Hedgehog signaling. Our findings reveal a regulation of RFX3 transcription factor and link fatty acid metabolism and protein lipidation to the regulation of ciliogenesis.