Acid sphingomyelinase (Asm) and acid ceramidase (Ac) are parts of the sphingolipid metabolism. Asm hydrolyzes sphingomyelin to ceramide, which is further metabolized to sphingosine by Ac. Ceramide generates ceramide-enriched platforms that are involved in receptor clustering within cellular membranes. However, the impact of cell-intrinsic ceramide on T cell function is not well characterized. By using T cell-specific Asm-or Ac-deficient mice, with reduced or elevated ceramide levels in T cells, we identified ceramide to play a crucial role in T cell function in vitro and in vivo. T cell-specific ablation of Asm in Smpd1fl/fl/Cd4cre/+(Asm/CD4cre) mice resulted in enhanced tumor progression associated with impaired T cell responses, whereas Asah1fl/fl/Cd4cre/+(Ac/CD4cre) mice showed reduced tumor growth rates and elevated T cell activation compared to the respective controls upon tumor transplantation. Further in vitro analysis revealed that decreased ceramide content supports CD4+ regulatory T cell differentiation and interferes with cytotoxic activity of CD8+ T cells. In contrast, elevated ceramide concentration in CD8+ T cells from Ac/CD4cre mice was associated with enhanced cytotoxic activity. Strikingly, ceramide co-localized with the T cell receptor (TCR) and CD3 in the membrane of stimulated T cells and phosphorylation of TCR signaling molecules was elevated in Ac-deficient T cells. Hence, our results indicate that modulation of ceramide levels, by interfering with the Asm or Ac activity has an effect on T cell differentiation and function and might therefore represent a novel therapeutic strategy for the treatment of T cell-dependent diseases such as tumorigenesis.