Sphingolipids such as ceramide and sphingosine have been regarded as novel signal mediators in cells. However, the mechanisms of generation of these lipids upon various stimulation remain to be elucidated. Neutral sphingomyelinase (N-SMase) is one of the key enzymes in the generation of ceramide, and recently the cloning of a putative N-SMase was reported. Because the function of the protein was unclear in the previous report, we investigated the role it plays in cells. N-SMase activity in cells overexpressing the protein with hexa-histidine tag was immunoprecipitated with anti-hexa-histidine antibody. The metabolism of ceramide and SM was not apparently affected in overexpressing cells. Radiolabeling experiments using [(3)H]palmitic acid or [(3)H]hexadecanol demonstrated an accumulation of 1-O-alkyl-sn-glycerol and a corresponding decrease of 1-alkyl-2-acyl-sn-glycero-3-phosphocholine in overexpressing cells. In vitro studies showed that both 1-acyl-2-lyso-sn-glycero-3-phosphocholine (lyso-PC) and 1-O-alkyl-2-lyso-sn-glycero-3-phosphocholine (lyso-platelet activating factor (lyso-PAF)) are good substrates of the protein. In further radiolabeling experiments, 1-acyl-lyso-PC was predominantly and equally metabolized into diacyl-PC in both vector and overexpressing cells. On the other hand, 1-O-alkyl-lyso-PC (lyso-PAF) was metabolized into both diradyl-PC and 1-O-alkyl-glycerol in overexpressing cells but only into diradyl-PC in vector cells. These results suggest that the protein acts as lyso-PAF-PLC rather than lyso-PC-PLC or N-SMase in cells.