Ceramide, produced through either the induction of SM hydrolysis or synthesized de novo transduces signals mediating differentiation, growth, growth arrest, apoptosis, cytokine biosynthesis and secretion, and a variety of other cellular functions. A generalized ceramide signal transduction scheme is shown in Fig. 2 in which ceramide is generated through the activation of distinct SMases residing in separate subcellular compartments in response to specific stimuli. Clearly, specificity of cellular responses to ceramide depends upon many factors which include the nature of the stimulus, co-stimulatory signals and the cell type involved. Ceramide derived from neutral SMase activation is thought to be involved in modulating CAPK and MAP kinases, PLA2 (arachidonic acid mobilization), and CAPP while ceramide generated through acid SMase activation appears to be primarily involved in NF-kappa B activation. While there is no apparent cross-talk between these two ceramide-mediated signalling pathways, there is likely to be significant cross-talk between ceramide signalling and other signal transduction pathways (e.g., the PKC and MAP kinase pathways). Other downstream targets for ceramide action include Cox, IL-6 and IL-2 gene expression, PKC zeta, Vav, Rb, c-Myc, c-Fos, c-Jun and other transcriptional regulators. Many, if not all, of these ceramide-mediated signalling events have been identified in the various cells comprising the immune system and are integral to the optimal functioning of the immune system. Although the role of the SM pathway and the generation of ceramide in T and B lymphocytes have only recently been recognized, it is clear from these studies that signal transduction through SM and ceramide can strongly affect the immune response, either directly through cell signalling events, or indirectly through cytokines produced by other cells as the result of signalling through the SM pathway. An overview of the signalling mechanisms coupling ceramide to the modulation of the immune response is depicted in Fig. 3 and shows how ceramide may play pivotal roles in regulating a number of complex processes. The SM pathway represents a potentially valuable focal point for therapeutic control of immune responses, perhaps for either enhancement of the activity of T cells in the elimination of tumors, or the down-regulation of lymphocyte function in instances of autoimmune disease. The recent explosion of knowledge regarding ceramide signalling notwithstanding, a number of critical questions need to be answered before a comprehensive, mechanistic understanding can be formulated relative to the incredibly varied effects of ceramide on cell function. For example, (i) how is a structurally simple molecule like ceramide able to mediate so many different, and sometimes paradoxical, physiological responses ranging from cell proliferation and differentiation to inhibition of cell growth and apoptosis, (ii) what are the molecular identities and modes of activation of the various SMase isoforms, (iii) what determines the distribution of the unique isoforms of SMase in cells of different lineages or at different stages of differentiation, (iv) what is the relative contribution of ceramide generated through SM hydrolysis versus de novo synthesis, and (v) by what means does ceramide interact with specific intracellular targets? Although a number of ceramide-activatable kinases, phosphatases, and their protein substrates have been identified, a more extensive search for additional cellular targets will be indispensable in determining the phosphorylation cascades linking the activation of the SM pathway to the regulation of nuclear events. Clearly, cross-talk between ceramide-induced signal transduction cascades and other signalling pathways adds to the inherent difficulty in distinguishing the specific effects of complex, intertwining signalling pathways.