Complex sphingolipids are abundant as eukaryotic cell membrane components, whereas their metabolites, in particular ceramide, sphingosine, and sphingosine 1-phosphate, are involved in diverse cell signaling processes. In mammals, degradation of ceramide by ceramidase yields sphingosine, which is phosphorylated by the action of sphingosine kinase to generate sphingosine 1-phosphate. Therefore, ceramidases are key enzymes in the regulation of the cellular levels of ceramide, sphingosine, and sphingosine 1-phosphate. To explore the physiological functions of a neutral ceramidase with diverse cellular locations, we disrupted the Asah2 gene in mice. Asah2 null mice have a normal life span and do not show obvious abnormalities or major alterations in total ceramide levels in tissues. The Asah2-encoded neutral ceramidase is highly expressed in the small intestine along the brush border, suggesting that the neutral ceramidase may be involved in a pathway for the digestion of dietary sphingolipids. Indeed, Asah2 null mice were deficient in the intestinal degradation of ceramide. Thus, the results indicate that the Asah2-encoded neutral ceramidase is a key enzyme for the catabolism of dietary sphingolipids and regulates the levels of bioactive sphingolipid metabolites in the intestinal tract.