Interleukin-1 triggers the down-regulation of several hepatic cytochrome P450 gene products, but the cellular signaling pathways involved are not known. We have examined the role of sphingomyelin hydrolysis to ceramide in the suppression of CYP2C11, a major constitutive form of cytochrome P450, by interleukin-1. Treatment of rat hepatocytes cultured on matrigel with interleukin-1 beta caused a rapid turnover of sphingomyelin and an increase in cellular ceramide, with no change in cellular phosphatidylcholine. The ceramide was composed mainly of a D-erythro-sphingosine backbone, suggesting that it was derived from sphingolipid hydrolysis rather than from increased de novo synthesis. Treatment of the cells with either N-acetyl-D-erythro-sphingosine (C2-ceramide) or bacterial sphingomyelinase suppressed the expression of CYP2C11 and induced the expression of the interleukin-1-responsive alpha 1-acid glycoprotein mRNA. In contrast, the acute-phase gene beta-fibrinogen, which is induced by interleukin-6 but not by interleukin-1, did not respond to C2-ceramide. N-Acetyl-D-erythro-sphinganine mimicked the effect of C2-ceramide on CYP2C11, but not on alpha 1-acid glycoprotein expression. These results are consistent with a role for ceramide or a related sphingolipid in mediating the down-regulation of CYP2C11, the induction of alpha 1-acid glycoprotein, and perhaps other cellular effects of interleukin-1 in hepatocytes.