Sphingosine kinase-1 (SPHK1) is a key enzyme catalyzing the formation of an important bioactive lipid messenger, sphingosine 1-phosphate, and is implicated in the regulation of cell proliferation and antiapoptotic processes. Biological features of another isozyme SPHK2, however, remain unclear. The present studies were undertaken to characterize SPHK2 by comparison with SPHK1. When SPHK2 was transiently expressed in various cell lines, it was localized in the nuclei as well as in the cytosol, whereas SPHK1 was distributed in the cytosol but not in the nucleus. We have mapped a functional nuclear localization signal (NLS) to the N-terminal region of SPHK2. We have observed that the expression of SPHK2 in various cell types causes inhibition of DNA synthesis, resulting in the cell cycle arrest at G1/S phase. We have also demonstrated that an NLS mutant of SPHK2, SPHK2R93E/R94E, failed to enter the nucleus and to inhibit DNA synthesis. Moreover, a fusion protein, NLS-SPHK1, where SPHK1 was fused to the NLS sequence of SPHK2 acquired the ability to enter nuclei and inhibited DNA synthesis. These results indicate that SPHK2 localizes in the nuclei and causes inhibition of DNA synthesis, and this may affect subsequent cellular events.