Previously we have identified the lipid mediator sphingosylphosphorylcholine (SPC) as the first potentially endogenous inhibitor of the ubiquitous Ca2+ sensor calmodulin (CaM) (Kovacs, E., and Liliom, K. (2008) Biochem. J. 410, 427-437). Here we give mechanistic insight into CaM inhibition by SPC, based on fluorescence stopped-flow studies with the model CaM-binding domain melittin. We demonstrate that both the peptide and SPC micelles bind to CaM in a rapid and reversible manner with comparable affinities. Furthermore, we present kinetic evidence that both species compete for the same target site on CaM, and thus SPC can be considered as a competitive inhibitor of CaM-target peptide interactions. We also show that SPC disrupts the complex of CaM and the CaM-binding domain of ryanodine receptor type 1, inositol 1,4,5-trisphosphate receptor type 1, and the plasma membrane Ca2+ pump. By interfering with these interactions, thus inhibiting the negative feedback that CaM has on Ca2+ signaling, we hypothesize that SPC could lead to Ca2+ mobilization in vivo. Hence, we suggest that the action of the sphingolipid on CaM might explain the previously recognized phenomenon that SPC liberates Ca2+ from intracellular stores. Moreover, we demonstrate that unlike traditional synthetic CaM inhibitors, SPC disrupts the complex between not only the Ca2+-saturated but also the apo form of the protein and the target peptide, suggesting a completely novel regulation for target proteins that constitutively bind CaM, such as ryanodine receptors.