The Golgi complex serves as the central hub of the biosynthetic pathway, where anterograde and retrograde trafficking fluxes converge. The mechanism by which cargo and Golgi-resident proteins traverse this organelle has long been debated. Recent discoveries have identified a molecular machinery that sorts Golgi-resident proteins into retrograde-directed COPI vesicles during cisternal maturation. Golgi phosphoprotein 3 (GOLPH3) is a key component of this machinery; however, the regulation and physiological relevance of GOLPH3-mediated Golgi retention remain largely uncharacterized. Here, we report that GOLPH3 binds the cytosolic tails of Golgi-resident glycosyltransferases via a negatively charged region on its surface. Productive interaction requires GOLPH3’s association with the Golgi membrane, mediated through an articulated mechanism that involves both specific and non-specific lipid interactions, and is regulated by functionally antagonistic S-acylation events. Moreover, we demonstrate that GOLPH3 depletion in mice leads to defects in protein and lipid glycosylation, resulting in severe impairments in growth and bone mineralization. Altogether, our findings reveal mechanistic regulation of intra-Golgi trafficking and underscore its importance in vertebrate development.