Ankyrin-G and βII-spectrin colocalize at sites of cell-cell contact in columnar epithelial cells and promote lateral membrane assembly. This study identifies two critical inputs from lipids that together provide a rationale for how ankyrin-G and βII-spectrin selectively localize to Madin-Darby canine kidney (MDCK) cell lateral membranes. We identify aspartate-histidine-histidine-cysteine 5/8 (DHHC5/8) as ankyrin-G palmitoyltransferases required for ankyrin-G lateral membrane localization and for assembly of lateral membranes. We also find that βII-spectrin functions as a coincidence detector that requires recognition of both ankyrin-G and phosphoinositide lipids for its lateral membrane localization. DHHC5/8 and βII-spectrin colocalize with ankyrin-G in micrometer-scale subdomains within the lateral membrane that are likely sites for palmitoylation of ankyrin-G. Loss of either DHHC5/8 or ankyrin-G-βII-spectrin interaction or βII-spectrin-phosphoinositide recognition through its pleckstrin homology domain all result in failure to build the lateral membrane. In summary, we identify a functional network connecting palmitoyltransferases DHHC5/8 with ankyrin-G, ankyrin-G with βII-spectrin, and βII-spectrin with phosphoinositides that is required for the columnar morphology of MDCK epithelial cells.