A calcium-dependent ceramide (Cer) kinase was recently detected in human leukemia (HL-60) cells (Kolesnick, R.N., and Hemer, M.R. (1990) J. Biol. Chem. 265, 18803-18808) where it may function in terminating the regulatory effects of Cer, and in synaptic vesicles (Bajjalieh, S. M., Martin, T. F. J., and Floor, E. (1989) J. Biol. Chem. 264, 14354-14360). We now demonstrate that the addition of both Cer-1-phosphate (Cer-1-P) and a short-acyl chain analog of Cer-1-P,N-hexanoylsphingosine-1-phosphate (C6-Cer-1-P) to cultured cells and a variety of subcellular fractions results in rapid degradation to Cer and C6-Cer, respectively. The Cer-1-P phosphatase activity is enriched in a rat liver plasma membrane fraction and appears to be distinct from the phosphatase that hydrolyzes phosphatidic acid (PA), PA phosphohydrolase, as shown by the difference in sensitivity of Cer-1-P and PA hydrolysis to propranolol, detergent, and heat treatment. Moreover, the Km of Cer-1-P hydrolysis is 10-fold lower than the Km of PA hydrolysis in plasma membrane. PA is a noncompetitive inhibitor of Cer-1-P hydrolysis, with an inhibition constant 1-1.5-fold higher than the Km of Cer-1-P hydrolysis. In contrast, Cer-1-P does not inhibit PA hydrolysis. Finally, we describe the synthesis of a novel analog of Cer-1-P which is not hydrolyzed in vitro and in vivo and is internalized in cultured cells by endocytosis. These results are discussed in relation to the possible roles of Cer-1-P in regulating intracellular levels of Cer.