We recently demonstrated that ceramide-coated balloon catheters limit vascular smooth muscle cell (VSMC) growth after stretch injury in vivo. In that study, inhibition of VSMC growth was correlated with a decrease in phosphorylation of the cell survival kinase Akt (protein kinase B). Utilizing cultured A7r5 VSMCs, we have now examined the mechanism by which ceramide inhibits Akt phosphorylation/activation. Our initial studies showed that ceramide-induced inhibition of Akt phosphorylation was not mediated through diminution in phosphoinositide 3-kinase activity. As we have previously demonstrated that protein kinase Czeta (PKCzeta) is a target of ceramide, we proposed an alternative signaling mechanism by which ceramide induces inhibition of Akt through activation of PKCzeta. We demonstrate that C(6)-ceramide (but not the inactive analog dihydro-C(6)-ceramide) induced PKCzeta activity and also caused a selective increase in the association between Akt and PKCzeta, without affecting PKCepsilon, in A7r5 cells. In addition, the ability of ceramide to significantly decrease platelet-derived growth factor-induced Akt phosphorylation or cell proliferation was abrogated in A7r5 cells overexpressing a dominant-negative mutant of PKCzeta. Taken together, these data suggest that ceramide-mediated activation of PKCzeta leads to diminished Akt activation and consequent growth arrest in VSMCs. The therapeutic potential for ceramide to limit dysregulated VSMC growth has direct applicability to vascular diseases such as restenosis and atherosclerosis.