A new protein modification reaction has been developed based on a palladium-catalyzed allylic alkylation of tyrosine residues. This technique employs electrophilic pi-allyl intermediates derived from allylic acetate and carbamate precursors and can be used to modify proteins in aqueous solution at room temperature. To facilitate the detection of modified proteins using SDS-PAGE analysis, a fluorescent allyl acetate was synthesized and coupled to chymotrypsinogen A and bacteriophage MS2. The tyrosine selectivity of the reaction was confirmed through trypsin digest analysis. The utility of the reaction was demonstrated by using taurine-derived carbamates as water solubilizing groups that are cleaved upon protein functionalization. This solubility switching technique was used to install hydrophobic farnesyl and C(17) chains on chymotrypsinogen A in water using little or no cosolvent. Following this, the C(17) alkylated proteins were found to associate with lipid vesicles. In addition to providing a new protein modification strategy targeting an under-utilized amino acid side chain, this method provides convenient access to synthetic lipoproteins.