Activation of the immune system has profound effects on endocrine function which are mediated by cytokines including tumor necrosis factor-alpha (TNF alpha). In vitro, TNF alpha has been shown to directly inhibit Leydig cell testosterone (T) production, but the mechanism of this effect is still unclear. Recent studies using cultured human fibroblasts have shown that TNF alpha stimulates the activity of neutral sphingomyelinase (SMase) which hydrolyses sphingomyelin (SM) generating ceramide and changing membrane components including cholesterol. The cellular affects of increased SMase activity have been reproduced in vitro by the addition of exogenous SMase. In cultured fibroblasts, exogenous SMase decreases cholesterol synthesis. These findings led us to hypothesize that SMase might be important in the regulation of steroid hormone synthesis. To our knowledge, no previous studies have investigated this possibility. To test this hypothesis, rat Leydig cell enriched cultures were incubated in media containing SMase (0.1 to 100 mU/ml) or in control media. SMase significantly decreased basal and human chorionic gonadotropin (hCG) stimulated T production. SMase also decreased hCG binding and hCG stimulated adenosine 3':5'-cyclic monophosphate (cAMP). N-acetyl-sphingosine (0.1 to 10 microM), a water soluble ceramide, was used to determine whether or not the effects of SMase could be reproduced by ceramide addition. N-acetyl-sphingosine had only slight effects on basal T and cAMP, and no effect on hCG binding or hCG stimulated T or cAMP. These data suggest the metabolism of membrane sphingomyelin may be an important regulatory pathway in the control of Leydig cell function.