Sphingolipids are ubiquitous membrane constituents whose metabolites function as signaling molecules in eukaryotic cells. Sphingosine 1-phosphate, a key sphingolipid second messenger, regulates proliferation, motility, invasiveness, and programmed cell death. These effects of sphingosine 1-phosphate and similar phosphorylated sphingoid bases have been observed in organisms as diverse as yeast and humans. Intracellular levels of sphingosine 1-phosphate are tightly regulated by the actions of sphingosine kinase, which is responsible for its synthesis and sphingosine-1-phosphate phosphatase and sphingosine phosphate lyase, the two enzymes responsible for its catabolism. In this study, we describe the cloning of the Caenorhabditis elegans sphingosine phosphate lyase gene along with its functional expression in Saccharomyces cerevisiae. Promoter analysis indicates tissue-specific and developmental regulation of sphingosine phosphate lyase gene expression. Inhibition of C. elegans sphingosine phosphate lyase expression by RNA interference causes accumulation of phosphorylated and unphosphorylated long-chain bases and leads to poor feeding, delayed growth, reproductive abnormalities, and intestinal damage similar to the effects seen with exposure to Bacillus thuringiensis toxin. Our results show that sphingosine phosphate lyase is an essential gene in C. elegans and suggest that the sphingolipid degradative pathway plays a conserved role in regulating animal development.