Specific ceramides are key regulators of cell fate, and extensive studies aimed to develop therapies based on ceramide-induced cell death. However, the mechanisms regulating ceramide cytotoxicity are not yet fully elucidated. Since ceramides also regulate growth and stress responses in yeast, we studied how different exogenous ceramides affect yeast cells. C2-phytoceramide, a soluble form of phytoceramides, the yeast counterparts of mammalian ceramides, greatly reduced clonogenic survival, particularly in the G2/M phase, but did not induce autophagy nor increase apoptotic markers. Rather, the loss of clonogenic survival was associated with PI positive staining, disorganization of lipid rafts and cell wall weakening. Sensitivity to C2-phytoceramide was exacerbated in mutants lacking Hog1p, the MAP kinase homolog of human p38 kinase. Decreasing sterol membrane content reduced sensitivity to C2-phytoceramide, suggesting sterols are the targets of this compound. This study identified a new function of C2-phytoceramide through disorganization of lipid rafts and induction of a necrotic cell death under hypo-osmotic conditions. Since lipid rafts are important in mammalian cell signaling and adhesion, our findings further support pursuing the exploitation of yeast to understand the basis of synthetic ceramides' cytotoxicity to provide novel strategies for therapeutic intervention in cancer and other diseases.