Acid sphingomyelinase occupies a prominent position in sphingolipid catabolism, catalyzing the hydrolysis of sphingomyelin to ceramide and phosphorylcholine. Enzymatic dysfunction of acid sphingomyelinase results in Niemann–Pick disease, a lysosomal storage disorder characterized at the cellular level by accumulation of sphingomyelin within the endo-lysosomal compartment. Over the past decade interest in the role of acid sphingomyelinase has moved beyond its ‘housekeeping’ function in constitutive turnover of sphingomyelin in the lysosome to include study of regulated ceramide generation. Ceramide functions as a bioactive sphingolipid with pleiotropic signaling properties, and has been implicated in diverse cellular processes of physiologic and pathophysiologic importance. Though many cellular enzymes have the capacity to generate ceramide, there is growing appreciation that ‘all ceramides are not created equal.’ Ceramides likely exert distinct effects in different cellular/subcellular compartments by virtue of access to other sphingolipid enzymes (e.g. ceramidases), effector molecules (e.g. ceramide-activated protein phosphatases), and neighboring lipids and proteins (e.g. cholesterol, ion channels). One of the unique features of acid sphingomyelinase is that it has been implicated in the hydrolysis of sphingomyelin in three different settings — the endo-lysosomal compartment, the outer leaflet of the plasma membrane, and lipoproteins. How a single gene product has the capacity to function in these diverse settings, and the subsequent impact on downstream ceramide-mediated biology is the subject of this review.