FoxO1 transcription factor controls the glucose and lipid metabolism, as well as cell proliferation and stress response. Akt, activated by insulin and other growth factors, phosphorylates FoxO1 causing its nuclear export and activity suppression. In this manuscript, we show that IL-1β, a pro-inflammatory cytokine, has the opposite effects on FoxO1. IL-1β stimulation of primary rat hepatocytes and HEK293 cells overexpressing the IL-1β receptor (293-IL-1RI) results in increased nuclear and cytosolic FoxO1 protein but not mRNA levels. IL-1β stimulation also elevates the levels of a mutant FoxO1 that is resistant to Akt phosphorylation. This suggests that an Akt-independent mechanism is involved. Co-stimulation with insulin does not affect the IL-1β induction of FoxO1. The IL-1β effects on FoxO1 are counteracted, however, by the silencing or inhibition of neutral sphingomyelinase 2 (nSMase-2) using shRNAi, scyphostatin, or GW4869, as well as by the pharmacological inhibition of JNK and ERK. Reversely, the overexpression of nSMase-2 through adenovirus-mediated gene transfer potentiates, in a JNK- and ERK-dependent manner, the IL-1β effects. We also show that transcription of insulin-like growth factor-binding protein-1 mRNA, which requires active FoxO1, is stimulated by IL-1β and is suppressed by the inhibition of nSMase-2 and JNK. In conclusion, we propose that IL-1β regulates FoxO1 activity through a novel nSMase-2-dependent pathway.