We have reported that ceramide mediates binding of atypical protein kinase C (PKC) zeta to its inhibitor protein, PAR-4 (prostate apoptosis response-4), thereby inducing apoptosis in differentiating embryonic stem cells. Using a novel method of lipid vesicle-mediated affinity chromatography, we showed here that endogenous ceramide binds directly to the PKCzeta.PAR-4 complex. Ceramide and its analogs activated PKCzeta prior to binding to PAR-4, as determined by increased levels of phosphorylated PKCzeta and glycogen synthase kinase-3beta and emergence of a PAR-4-to-phosphorylated PKCzeta fluorescence resonance energy transfer signal that co-localizes with ceramide. Elevated expression and activation of PKCzeta increased cell survival, whereas expression of PAR-4 promoted apoptosis. This suggests that PKCzeta counteracts apoptosis, unless its ceramide-induced activation is compromised by binding to PAR-4. A luciferase reporter assay showed that ceramide analogs activate nuclear factor (NF)-kappaB unless PAR-4-dependent inhibition of PKCzeta suppresses NF-kappaB activation. Taken together, our results show that direct physical association with ceramide and PAR-4 regulates the activity of PKCzeta. They also indicate that this interaction regulates the activity of glycogen synthase kinase-3beta and NF-kappaB.