Ceramide, a sphingolipid, is an important signaling molecule in the inflammatory response. Mediators of acute lung injury such as TNF-alpha, platelet-activating factor, and Fas/Apo ligand stimulate sphingomyelin hydrolysis to increase intracellular ceramide levels. Surfactant protein B (SP-B), a hydrophobic protein of pulmonary surfactant, is essential for surfactant function and lung stability. In this study we investigated the effects of ceramide on SP-B gene expression in H441 lung epithelial cells. Ceramide decreased SP-B mRNA levels in control and dexamethasone-treated cells after 24-h incubation and inhibition of SP-B mRNA was associated with inhibition of immunoreactive SP-B. In transient transfections assays, ceramide inhibited SP-B promoter activity, indicating that the inhibitory effects are exerted at the transcriptional level. Deletion mapping experiments showed that the ceramide-responsive region is located within the -233/-80-bp region of human SP-B promoter. Electrophoretic mobility shift and reporter assays showed that ceramide reduced the DNA binding activity and transactivation capability of thyroid transcription factor 1 (TTF-1/Nkx2.1), a key factor for SP-B promoter activity. Collectively these data showed that ceramide inhibits SP-B gene expression by reducing the DNA biding activity of TTF-1/Nkx2.1 transcription factor. Protein kinase C inhibitor bisindolylmaleimide and the protein tyrosine kinase inhibitor genistein partially reversed ceramide inhibition, indicating that protein kinases play important roles in the ceramide inhibition of SP-B gene expression. Chemical inhibitors of de novo ceramide synthesis and sphingomyelin hydrolysis had no effect on TNF-alpha inhibition of SP-B promoter activity and mRNA levels, suggesting that ceramide does not play a role in the inhibition.