Sphingomyelin synthase (SMS), an enzyme involved in sphingomyelin (SM) and ceramide metabolism, can potentially regulate, in opposite directions, the levels of ceramide and diacylglycerol. In this study SMS activity was investigated in normal and SV40-transformed human lung fibroblasts (WI38). The addition of [3H]C2-ceramide to cells resulted in a time-dependent formation of [3H]C2-SM. At 24 h after treatment, normal WI38 cells cleared 17% of [3H]C2-ceramide producing [3H]C2-SM, which accounted for 13% of total radioactivity. On the other hand, SV40-transformed cells cleared 45% of [3H]C2-ceramide and produced C2-SM, which accounted for 24% of total radioactivity. This enhanced production of C2-SM was also supported by an increase in the total SMS activity of cells (measured in vitro), such that SV40-transformed cells had SMS activity of 222 pmol/mg of protein/h, whereas wild type cells had 78 pmol/mg of protein/h of activity. Additional studies aimed at examining the SMS activity directed at ceramide produced in the plasma membrane. Treatment of cells with exogenous bacterial sphingomyelinase (SMase) for 25 min resulted in cleavage of 90-95% of total SM and the concomitant generation of ceramide. After bacterial SMase treatment, wild type WI38 cells cleared ceramide very slowly (19.2 pmol of ceramide/nmol of phosholipid Pi after 6 h of incubation) and hardly regenerated any SM. On the other hand, SV40-transformed cells cleared ceramide much faster (41.1 pmol/nmol of Pi after 6 h of incubation) and regenerated approximately 80% of the original SM. These results show that the enhanced SMS activity of transformed cells is particularly pronounced when ceramide is produced in the plasma membrane. Finally, several observations led us to consider the relationship of SMS to the "putative" phosphatidylcholine-specific phospholipase C (PC-PLC). We, therefore, tested the effects of D609, a purported PC-PLC-specific inhibitor on the activity of SMS. D609 inhibited SMS activity in vitro. In addition, cellular studies showed that SMS activity was dramatically inhibited by concentrations of D609 used previously to study PC-PLC (10-50 microg/ml). These results suggest SMS as an important biochemical target for D609, and they raise the distinct possibility that many of the roles of PC-PLC, especially in cell transformation, may be attributable to SMS.