Sphingosine‐1‐phosphate (S1P), a sphingolipid metabolite, promotes cell proliferation and survival whereas its precursor, sphingosine, has the opposite effects. However, much remains unknown about their regulation. Here we identify a novel human ceramidase (haCER2) that regulates the levels of both sphingosine and S1P by controlling the hydrolysis of ceramides. haCER2 is localized to the Golgi complex and is highly expressed in the placenta. High ectopic expression of haCER2 caused fragmentation of the Golgi complex and growth arrest in HeLa cells due to sphingosine accumulation. Low ectopic expression of haCER2 increased S1P without sphingosine accumulation, promoting cell proliferation in serum‐free medium. This proliferative effect was suppressed by dimethylsphingosine, an inhibitor of the S1P formation, or by the RNA interference (RNAi) ‐mediated inhibition of S1P 1, a G‐protein‐coupled receptor for S1P. The RNAi‐mediated down‐regulation of haCER2 enhanced the serum deprivation‐induced growth arrest and apoptosis of HeLa cells, which was inhibited by addition of exogenous S1P. Serum deprivation up‐regulated both haCER2 mRNA and activity in HeLa cells. haCER2 mRNA is also up‐regulated in some tumors. Taken together, these results suggest that haCER2 is important for the generation of S1P and S1P‐mediated cell proliferation and survival, but that its overexpression may cause cell growth arrest due to an accumulation of sphingosine.—Xu, R., Jin, J., Hu, W., Sun, W., Bielawski, J., Szulc, Z., Taha, T., Obeid, L. M., Mao, C. Golgi alkaline ceramidase regulates cell proliferation and survival by controlling levels of sphingosine and S1P FASEB J . 20, 1813–1825 (2006)