The present study describes the role of glycosphingolipids in neuroinflammatory disease and investigates tumor necrosis factor alpha (TNFalpha)-induced astrogliosis following spinal cord injury. Astrogliosis is the hallmark of neuroinflammation and is characterized by proliferation of astrocytes and increased glial fibrillary acidic protein (GFAP) gene expression. In primary astrocytes, TNFalpha stimulation increased the intracellular levels of lactosylceramide (LacCer) and induced GFAP expression and astrocyte proliferation. D-threo-1-phenyl-2-decanoylamino-3-morpholino-1-propanol.HCl (PDMP), a glucosylceramide synthase and LacCer synthase (GalT-2) inhibitor, inhibited astrocyte proliferation and GFAP expression, which were reversed by exogenous supplementation of LacCer but not by other glycosphingolipids. TNFalpha caused a rapid increase in the activity of GalT-2 and synthesis of LacCer. Silencing of GalT-2 gene using antisense oligonucleotides also attenuated the proliferation of astrocytes and GFAP expression. The PDMP and antisense-mediated inhibition of proliferation and GFAP expression was well correlated with decreased Ras/ERK1/2 pathway activation. Furthermore, TNFalpha-mediated astrocyte proliferation and GFAP expression was also inhibited by LY294002, a phosphatidylinositol 3-kinase inhibitor, which was reversed by exogenous LacCer. LY294002 also inhibited TNFalpha-induced GalT-2 activation and LacCer synthesis, suggesting a phosphatidylinositol 3-kinase-mediated regulation of GalT-2. In vivo, PDMP treatment attenuated chronic ERK1/2 activation and spinal cord injury (SCI)-induced astrocyte proliferation with improved functional recovery post-SCI. Therefore, the in vivo studies support the conclusions drawn from cell culture studies and provide evidence for the role of LacCer in TNFalpha-induced astrogliosis in a rat model of SCI. To our knowledge, this is the first report demonstrating the role of LacCer in the regulation of TNFalpha-induced proliferation and reactivity of primary astrocytes.