Sphingosine-1-phosphate (S1P), an important sphingolipid metabolite, regulates diverse cellular processes, including cell survival, growth, and differentiation. Here we show that S1P signaling is critical for neural and vascular development. Sphingosine kinase-null mice exhibited a deficiency of S1P which severely disturbed neurogenesis, including neural tube closure, and angiogenesis and caused embryonic lethality. A dramatic increase in apoptosis and a decrease in mitosis were seen in the developing nervous system. S1P₁ receptor-null mice also showed severe defects in neurogenesis, indicating that the mechanism by which S1P promotes neurogenesis is, in part, signaling from the S1P₁ receptor. Thus, S1P joins a growing list of signaling molecules, such as vascular endothelial growth factor, which regulate the functionally intertwined pathways of angiogenesis and neurogenesis. Our findings also suggest that exploitation of this potent neuronal survival pathway could lead to the development of novel therapeutic approaches for neurological diseases.