We have identified the yeast sphingosine resistance gene (YSR2) of Saccharomyces cerevisiae as encoding a protein that specifically dephosphorylates dihydrosphingosine 1-phosphate (DHS-1-P), and we refer to this protein as dihydrosphingosine-1-phosphate phosphatase. Overexpression of YSR2 conferred sphingosine resistance to the dihydrosphingosine-1-P lyase-defective mutant (JS16) of S. cerevisiae, which is hypersensitive to sphingosine. The ysr2⌬ deletion mutant of S. cerevisiae accumulated DHS-1-P compared with its wild type strain upon labeling with D-erythro-[4,5-3 H]dihydrosphingosine, whereas overexpression of YSR2 increased dephosphorylation of DHS-1-P. An epitopetagged fusion protein (YSR2-Flag) was partially purified and found to specifically dephosphorylate DHS-1-P to yield dihydrosphingosine. YSR2 failed to dephosphorylate ceramide 1-phosphate or phosphatidic acid. Functionally, the mutant bearing the ysr2⌬ deletion decreased labeling of sphingolipids and increased labeling of glycerolipids dramatically following in vivo labeling with D-erythro-[ 3 H]dihydrosphingosine, but it slightly affected labeling of sphingolipids with inositol. Taken together, these results identify YSR2 as dihydrosphingosine-1-phosphate phosphatase. They also raise the intriguing possibility that phosphorylation followed by dephosphorylation is required for incorporation of exogenous long chain sphingoid bases into sphingolipids.Sphingolipids are important components of eukaryotic cell membranes. Animals develop different diseases due to genetically or environmentally altered sphingolipid metabolism (1, 2). Sphingolipids have structural functions in maintaining cell membrane integrity, and they act as anchors to proteins (3). In addition, metabolites of sphingolipids such as ceramide, sphingosine, and sphingosine 1-phosphate (S-1-P) 1 have been demonstrated to be involved as bioeffector molecules and second messengers in key events including cell growth, differentiation, cell senescence, apoptosis, and stress responses (1-5). S-1-P has a proliferative effect on certain quiescent cells and has been shown to trigger intracellular calcium mobilization (5). Platelet-derived growth factor induces an elevation in cellular levels of sphingosine and S-1-P and activates sphingosine kinase in quiescent fibroblasts. These studies imply that S-1-P participates in the mitogenic action of this and other growth factors (6).In the yeast Saccharomyces cerevisiae, sphingolipids have been demonstrated to be essential for cell viability, based on studies of long chain sphingoid base auxotrophs that are defective in serine palmitoyltransferase, the first enzyme in the de novo pathway of sphingolipid synthesis (7). Importantly, at least some sphingolipid-mediated cell events are conserved between mammalian cells and S. cerevisiae (8). For example, ceramide induces S. cerevisiae growth suppression and cell cycle arrest, and the mammalian counterpart of ceramide-activated protein phosphatase has been identified in S. cerevisiae (9).In this report, we ...