The natural substrate for sphingomyelinase contains hydrophobic and polar moieties. In this study, we have employed pH rate studies and examined hydrophobic compounds and phosphorylated esters for their effect on sphingomyelinase activity in an attempt to determine some of the kinetic properties of this enzyme. Sphingomyelinase, purified from human placentae, undergoes noncompetitive inhibition by octylglucoside and Nonidet P-40, two nonionic detergents containing terminal octyl groups. The effect of these detergents at the hydrophobic binding site is somewhat different from that of Triton X-100, which contains an isooctyl terminal group, and this may serve to identify a structural basis for the effects. Sphingomyelinase activity is also modulated by several nucleotides. Inhibition by 5'-adenosine monophosphate (5'-AMP) is also noncompetitive. Other nucleotide monophosphates (such as 5'-uridine monophosphate (5'-UMP), 5'-cytidine monophosphate (5'-CMP), 2'-adenosine monophosphate (2'-AMP), and 3'-adenosine monophosphate (3'-AMP) and phosphorylated intermediates (such as phosphorylcholine, phosphorylethanolamine and hexose phosphates) have a lower inhibitory effect. The data suggest that the inhibition by 5'-AMP involves the combined effect of the phosphate group and the purine ring, structural requirements which may also be satisfied by bis(4-methylumbelliferyl)phosphate, a synthetic enzyme substrate. Studies of pH rate indicate that the maximal velocity for the hydrolysis of sphingomyelin is independent of pH over the range 3.5-6.2 while the Km value shows a pH dependence. The Km value is lowest from pH 4.0-5.2 and rises at pH values outside this range. The log Vmax/Km and pKm relationships, when plotted as a function of pH, have been used to identify the dissociation constants for the binding of sphingomyelin by the enzyme. These occur at pK values of 4.1 and 5.5. The activity of sphingomyelinase is also reduced when the enzyme is photooxidized in the presence of methylene blue or rose bengal and carbamylated by diethylpyrocarbonate (DEPC). These results are interpreted to show that 1). the enzyme contains a hydrophobic binding site which involves linear aliphatic moieties containing at least eight carbon atoms; 2) two ionic groups are involved in formation of the enzyme substrate complex, one of which is presumed to be the carboxylate group of aspartate or glutamate (represented by pK 4.1) and the second may be the protonated imidazolium group of histidine (represented by pK 5.5); and 3) since the maximal velocity shows no pH dependence, the interactions involving the hydrophobic and ionic groups affect only the binding of the substrate to the enzyme and formation of the enzyme-substrate complex.