In recent years, sphingolipids have emerged as critical molecules in the regulation of microbial pathogenesis. In fungi, the synthesis of complex sphingolipids is important for the regulation of pathogenicity, but the role of sphingolipid degradation in fungal virulence is not known. Here, we isolated and characterized the inositol phosphosphingolipid-phospholipase C1 (ISC1) gene from the fungal pathogen Cryptococcus neoformans and showed that it encodes an enzyme that metabolizes fungal inositol sphingolipids. Isc1 protects C. neoformans from acidic, oxidative, and nitrosative stresses, which are encountered by the fungus in the phagolysosomes of activated macrophages, through a Pma1-dependent mechanism(s). In an immunocompetent mouse model, the C. neoformans Δisc1 mutant strain is almost exclusively found extracellularly and in a hyperencapsulated form, and its dissemination to the brain is remarkably reduced compared to that of control strains. Interestingly, the dissemination of the C. neoformans Δisc1 strain to the brain is promptly restored in these mice when alveolar macrophages are pharmacologically depleted or when infecting an immunodeficient mouse in which macrophages are not efficiently activated. These studies suggest that Isc1 plays a key role in protecting C. neoformans from the intracellular environment of macrophages, whose activation is important for preventing fungal dissemination of the Δisc1 strain to the central nervous system and the development of meningoencephalitis.