python modify item in list, save back in list

I have a hunch that I need to access an item in a list (of strings), modify that item (as a string), and put it back in the list in the same index

I'm having difficulty getting an item back into the same index

for item in list:
    if "foo" in item:
        item = replace_all(item, replaceDictionary)
        list[item] = item
        print item

now I get an error

TypeError: list indices must be integers, not str

due to this line list[item] = item

which makes sense! but I do not know how to put the item back into the list at that same index using python

what is the syntax for this? Ideally the for loop can keep track of the index I am currently at