Studying apoptosis induced by T cell receptor (TCR) cross-linking in the T cell hybridoma, 3DO, we found both neutral sphingomyelinase activation and production of ceramide upon receptor engagement. Pharmacological inhibition of ceramide production by the fungal toxin, fumonisin B1, impaired TCR-induced interleukin (IL)-2 production and programmed cell death. Addition of either exogenous ceramide or bacterial sphingomyelinase reconstituted both responses. Moreover, specific inactivation of neutral sphingomyelinase by antisense RNA inhibited IL-2 production and mitogen-activated protein kinase activation after TCR triggering. These results suggest that ceramide production by activation of neutral sphingomyelinase is an essential component of the TCR signaling machinery.