Human alkaline ceramidase 3 (ACER3) is one of three alkaline ceramidases (ACERs) that catalyze the conversion of ceramide to sphingosine. ACERs are members of the CREST superfamily of integral-membrane hydrolases. All CREST members conserve a set of three Histidine, one Aspartate, and one Serine residue. Although the structure of ACER3 was recently reported, catalytic roles for these residues have not been biochemically tested. Here, we use ACER3 as a prototype enzyme to gain insight into this unique class of enzymes. Recombinant ACER3 was expressed in yeast mutant cells that lack endogenous ceramidase activity, and microsomes were used for biochemical characterization. Six-point mutants of the conserved CREST motif were developed that form a Zn-binding active site based on a recent crystal structure of human ACER3. Five point mutants completely lost their activity, with the exception of S77A, which showed a 600-fold decrease compared with the wild-type enzyme. The activity of S77C mutant was pH sensitive, with neutral pH partially recovering ACER3 activity. This suggested a role for S77 in stabilizing the oxyanion of the transition state. Together, these data indicate that ACER3 is a Zn2+-dependent amidase that catalyzes hydrolysis of ceramides via a similar mechanism to other soluble Zn-based amidases. Consistent with this notion, ACER3 was specifically inhibited by trichostatin A, a strong zinc chelator.