Sphingolipids have been implicated as key mediators of cell-stress responses and effectors of mitochondrial function. To investigate potential mechanisms underlying mitochondrial dysfunction, an important contributor to diabetic cardiomyopathy, we examined alterations of cardiac sphingolipid metabolism in a mouse with streptozotocin-induced type 1 diabetes. Diabetes increased expression of desaturase 1, (dihydro)ceramide synthase (CerS)2, serine palmitoyl transferase 1, and the rate of ceramide formation by mitochondria-resident CerSs, indicating an activation of ceramide biosynthesis. However, the lack of an increase in mitochondrial ceramide suggests concomitant upregulation of ceramide-metabolizing pathways. Elevated levels of lactosylceramide, one of the initial products in the formation of glycosphingolipids were accompanied with decreased respiration and calcium retention capacity (CRC) in mitochondria from diabetic heart tissue. In baseline mitochondria, lactosylceramide potently suppressed state 3 respiration and decreased CRC, suggesting lactosylceramide as the primary sphingolipid responsible for mitochondrial defects in diabetic hearts. Moreover, knocking down the neutral ceramidase (NCDase) resulted in an increase in lactosylceramide level, suggesting a crosstalk between glucosylceramide synthase- and NCDase-mediated ceramide utilization pathways. These data suggest the glycosphingolipid pathway of ceramide metabolism as a promising target to correct mitochondrial abnormalities associated with type 1 diabetes.