The human p55 tumor necrosis factor (TNF) receptor (TR55) initiates at least two independent signaling cascades. The acidic sphingomyelinase (A-SMase) pathway involves a phosphatidylcholine-specific phospholipase C, an endosomal A-SMase, and controls expression of multiple TNF-responsive genes through induction of transcription factors such as NF-kappaB. The neutral sphingomyelinase (N-SMase) pathway comprises a membrane-bound N-SMase, proline-directed protein kinases, as well as phospholipase A2 and appears critical for the inflammatory responses induced by TNF. While the domain of TR55 that induces A-SMase is probably identical to the death domain, the exact location and extent of a putative N-SMase activation domain are still unknown. Structure-function analysis of TR55 deletion mutants revealed a novel region of 11 amino acids at position 309-319 that is both necessary and sufficient for activation of N-SMase. The N-SMase activation domain is distinct from the death domain and incapable of induction of A-SMase, NF-kappaB, and cytotoxicity. Taken together, our results suggest that a functionally independent region of TR55 is responsible for selectively initiating the N-SMase pathway that couples to an important inflammatory signaling cascade.