In addition to playing a role as a structural component of cellular membranes, ceramide is now clearly recognized as a bioactive lipid implicated in a variety of physiological functions. This review aims to provide updated information on the role of ceramide in the regulation of vascular tone. Ceramide may induce vasodilator or vasoconstrictor effects by interacting with several signaling pathways in endothelial and smooth muscle cells. There is a clear, albeit complex, interaction between ceramide and redox signaling. In fact, reactive oxygen species (ROS) activate different ceramide generating pathways and, conversely, ceramide is known to increase ROS production. In recent years, ceramide has emerged as a novel key player in oxygen sensing in vascular cells and mediating vascular responses of crucial physiological relevance such as hypoxic pulmonary vasoconstriction (HPV) or normoxic ductus arteriosus constriction. Likewise, a growing body of evidence over the last years suggests that exaggerated production of vascular ceramide may have detrimental effects in a number of pathological processes including cardiovascular and lung diseases.