Recent investigation of the roles of sphingolipids in signal transduction and cell regulation is shedding a new light on the mechanisms of growth suppression and apoptosis. A sphingomyelin cycle has been identified whereby the action of certain extracellular agents (such as tumor necrosis factor alpha) results in activation of a sphingomyelinase, which cleaves membrane sphingomyelin, to generate cellular ceramide. Ceramide, in turn, has emerged as a candidate intracellular mediator for the action of these extracellular agents, and has multiple cellular and biochemical targets. In particular, ceramide is a potent and specific suppressor of cell growth and an inducer of apoptosis. Further studies on this signal transduction pathway should provide new understanding of the physiological functions of ceramide and promise significant insight into a novel biochemical pathway regulating apoptosis.