The lipid second messenger ceramide regulates several biochemical events that occur during aging. In addition, its level is highly elevated in the amyloid-burdened brains of Alzheimer's disease patients. Here, we analyzed the impact of aberrant ceramide levels on amyloid beta-peptide (Abeta) generation by using a cell-permeable analog of ceramide, C6-ceramide, and several biochemical inhibitors of the sphingomyelin/glycosphingolipid biosynthetic pathway. We found that C6-ceramide increased the biogenesis of Abeta by affecting beta-but not gamma-cleavage of the amyloid precursor protein. Similarly to C6-ceramide, increased levels of endogenous ceramide induced by neutral sphingomyelinase treatment also promoted the biogenesis of Abeta. Conversely, fumonisin B1, which inhibits the biosynthesis of endogenous ceramide, reduced Abeta production. Exogenous C6-ceramide restored both intracellular ceramide levels and Abeta generation in fumonisin B1-treated cells. These events were specific for amyloid precursor protein and were not associated with apoptotic cell death. Pulse-chase and time-course degradation experiments showed that ceramide post-translationally stabilizes the beta-secretase BACE1. Taken together, these data indicate that the lipid second messenger ceramide, which is elevated in the brains of Alzheimer's disease patients, increases the half-life of BACE1 and thereby promotes Abeta biogenesis.