Ceramide is not only a core intermediate of sphingolipids but also an important modulator of many cellular events including apoptosis, cell cycle arrest, senescence, differentiation, and stress responses. Its turnover may be tightly regulated. However, little is known about the regulation of its metabolism because most enzymes responsible for its synthesis and breakdown have yet to be cloned. Here we report the cloning and characterization of the yeast gene YPC1 (YBR183w) by screening Saccharomyces cerevisiae genes whose overexpression bestows resistance to fumonisin B1. We demonstrate that the yeast gene YPC1 encodes an alkaline ceramidase activity responsible for the breakdown of dihydroceramide and phytoceramide but not unsaturated ceramide. YPC1 ceramidase activity was confirmed by in vitro studies using an Escherichia coli expression system. Importantly, YPC1p also has reverse activity, catalyzing synthesis of phytoceramide from palmitic acid and phytosphingosine. This ceramide synthase activity is CoA-independent and is resistant to fumonisin B1, thus explaining why YPC1 was cloned as a fumonisin B1-resistant gene.