Protein acylation is critical for many cellular functions across all domains of life. In bacteria, lipoproteins have important roles in virulence and are targets for the development of antimicrobials and vaccines. Bacterial lipoproteins are secreted from the cytosol via the Sec pathway and acylated on an N-terminal cysteine residue through the action of three enzymes. In Gram-negative bacteria, the Lol pathway transports lipoproteins to the outer membrane. Here, we demonstrate that the Aat secretion system is a composite system sharing similarity with elements of a type I secretion systems and the Lol pathway. During secretion, the AatD subunit acylates the substrate CexE on a highly conserved N-terminal glycine residue. Mutations disrupting glycine acylation interfere with membrane incorporation and trafficking. Our data reveal CexE as the first member of a new class of glycine-acylated lipoprotein, while Aat represents a new secretion system that displays the substrate lipoprotein on the cell surface.