Immunosuppressant drugs such as cyclosporin have allowed widespread organ transplantation, but their utility remains limited by toxicities, and they are ineffective in chronic management of autoimmune diseases such as multiple sclerosis. In contrast, the immune modulating drug FTY720 is efficacious in a variety of transplant and autoimmune models without inducing a generalized immunosuppressed state and is effective in human kidney transplantation. FTY720 elicits a lymphopenia resulting from a reversible redistribution of lymphocytes from circulation to secondary lymphoid tissues by unknown mechanisms. Using FTY720 and several analogs, we show now that FTY720 is phosphorylated by sphingosine kinase; the phosphorylated compound is a potent agonist at four sphingosine 1-phosphate receptors and represents the therapeutic principle in a rodent model of multiple sclerosis. Our results suggest that FTY720, after phosphorylation, acts through sphingosine 1-phosphate signaling pathways to modulate chemotactic responses and lymphocyte trafficking.