Ceramide mediates the effects of extracellular agents on cellular growth, differentiation and apoptosis. In this study, we explored the mechanisms by which ceramide induces its cellular effects. In Molt-4 cells, phorbol 12-myristate 13-acetate (PMA) induced retinoblastoma gene product (Rb) phosphorylation, and ceramide inhibited this effect, suggesting an inhibitory effect of ceramide on the protein kinase C (PKC) pathway, the primary target of PMA. Molt-4 cells contained primarily PKCalpha and betaII isoforms of PKC. To determine the effects of ceramide on PKC, we developed an immunoprecipitation assay for PKCalpha activity. Exposure of Molt-4 cells to C6-ceramide resulted in a concentration and time-dependent inhibition of immunoprecipitated protein kinase Calpha (PKCalpha). Initial inhibition was observed as early as 4.5 h after treatment of cells with C6-ceramide, and the activity was completely lost by 13 h. Inhibition of PKCalpha activity was seen at concentrations of ceramide as low as 5 microM with maximal effects occurring at a concentration of 15 microM. Both C2 and C6-ceramide were inhibitory, but C2 and C6 dihydroceramides were not. Ceramide did not directly inhibit PKCalpha in vitro or modulate the levels of PKCalpha protein, suggesting that ceramide acted indirectly. Moreover, ceramide did not inhibit PMA-induced translocation of PKCalpha. Taken together, these results suggested that ceramide caused inactivation of PKCalpha. Since PKC requires phosphorylation for activity, we determined the effects of ceramide on phosphorylation of PKCalpha. C6-ceramide inhibited basal and PMA-induced phosphorylation of PKCalpha. In addition, okadaic acid, a potent phosphatase inhibitor, slightly stimulated PKC activity and blocked the effects of ceramide on PKCalpha inhibition. These results demonstrate that ceramide causes inhibition/inactivation of PKCalpha and suggest these effects of ceramide may be mediated by a protein phosphatase.