It is widely accepted that functional ATP-binding cassette transporter A1 (ABCA1) is critical for the formation of nascent high density lipoprotein particles. However, the cholesterol pool(s) and the cellular signaling processes utilized by the ABCA1-mediated pathway remain unclear. Sphingomyelin maintains a preferential interaction with cholesterol in membranes, and its catabolites, especially ceramide, are potent signaling molecules that could play a role in ABCA1 regulation or function. To study the potential role of ceramide in this process, we treated a variety of cell lines with 20 microM C2-ceramide and examined apolipoprotein-mediated cholesterol efflux to lipid-free apoA-I. We found that cell lines expressing ABCA1 displayed 2-3-fold increases in cholesterol efflux to apoA-I. Cell lines not expressing ABCA1 were unaffected by ceramide. We further characterized the cholesterol efflux effect in Chinese hamster ovary cells. Ceramide treatment did not cause significant cytotoxicity or apoptosis and did not affect cholesterol efflux to non-apolipoprotein acceptors. Raising endogenous ceramide levels increased cholesterol efflux to apoA-I. Using a cell surface biotinylation method, we found that the total cellular ABCA1 and that at the plasma membrane were increased with ceramide treatment. Also ceramide enhanced the binding of fluorescently labeled apoA-I to Chinese hamster ovary cells. These data suggest that ceramide may increase the plasma membrane content of ABCA1, leading to increased apoA-I binding and cholesterol efflux.