Prostaglandin E stimulates bone formation in humans and animals, and increases intracellular cAMP in osteoblastic cells. We found that cAMP inhibits apoptosis in osteoblastic cells, and examined the mechanism of this effect. We report that the cAMP elevating agent, forskolin, increases cell number in the rat periosteal cell line (RP-11), by suppressing apoptosis in a cell type-specific manner. In RP-11, forskolin transiently up-regulates extracellular signal-regulated kinase activity, a known suppressor of apoptosis. PD98059, a selective inhibitor of the extracellular signal-regulated kinase pathway, only partially reverses the antiapoptotic effect of forskolin, which suggests an additional mechanism for cAMP action. We found that forskolin stimulates cytosolic sphingosine kinase (SPK) activity in these cells; in two other osteoblastic cell lines, however, forskolin does not suppress apoptosis. In contrast to the partial opposing effect of PD98059 to forskolin action,N,N-dimethylsphingosine, a specific inhibitor of SPK, completely reverses the antiapoptotic effect of forskolin, and has no effect on apoptosis in the absence of forskolin. These findings show for the first time that cAMP activates SPK in a cell-type-specific manner, and suggest that cAMP suppression of apoptosis in RP-11 periosteal cells is mediated by its stimulation of SPK.