The sphingomyelin pathway is a ubiquitous, evolutionary conserved signaling system initiated by hydrolysis of the plasma membrane phospholipid sphingomyelin to generate the second messenger ceramide. Sphingomyelin degradation is catalyzed by acid and neutral sphingomyelinase (SMase) isoforms. Most, if not all mammalian cells, appear capable of signaling though the sphingomyelin pathway. Diverse receptor types and environmental stresses utilize the sphingomyelin pathway as a downstream effector system. In some cellular systems, ceramide initiates differentiation or cell proliferation, while in other systems, ceramide signals apoptosis. Recent investigations link the activation of neutral SMase to the extracellular signal regulated kinase (ERK) cascade and pro-inflammatory responses, and acid SMase to the stress-activated protein kinase/c-jun kinase (SAPK/JNK) cascade and apoptotic responses. Environmental stresses act directly on membrane to activate acid pH-dependent sphingomyelinase (ASMase), whereas cytokine receptors signal ASMase activation through motifs termed death domains. The present review focuses on mechanisms of activation of ASMase and on ceramide signaling of the apoptotic response.