Acid ceramidase (N-acylsphingosine deacylase, EC 3.5.1.23; AC) is the lipid hydrolase responsible for the degradation of ceramide into sphingosine and free fatty acids within lysosomes. The enzymatic activity was first identified over four decades ago, and is deficient in the inherited lipid storage disorder, Farber Lipogranulomatosis (Farber disease). Importantly, AC not only hydrolyzes ceramide into sphingosine, but also can synthesize ceramide from sphingosine and free fatty acids in vitro and in situ. This "reverse" enzymatic activity occurs at a distinct pH from the hydrolysis ("forward") reaction (6.0 vs. 4.5, respectively), suggesting that the enzyme may have diverse functions within cells dependent on its subcellular location and the local pH. Most information concerning the role of AC in human disease stems from work on Farber disease. This lipid storage disease is caused by mutations in the gene encoding AC, leading to a profound reduction in enzymatic activity. Recent studies have also shown that AC activity is aberrantly expressed in several human cancers, and that the enzyme may be a useful cancer drug target. For example, AC inhibitors have been used to slow the growth of cancer cells, alone or in combination with other established, anti-oncogenic treatments. Aberrant AC activity also has been described in Alzheimer's disease, and overexpression of AC may prevent insulin resistant (Type II) diabetes induced by free fatty acids. Current information concerning the biology of this enzyme and its role in human disease is reviewed within.