Sphingomyelinases hydrolyse sphingomyelin to ceramide, a process involved in signal-transduction routes leading to apoptosis and various other cellular responses. In the present study, we investigated the sphingomyelinase content of caveolae, invaginated plasma-membrane microdomains that contain a variety of signalling molecules. These structures are highly enriched in sphingomyelin as well as in ceramide, which suggests that metabolism of these lipids might, to some extent, occur locally. By cell fractionation, we demonstrate that, in addition to a previously reported minute amount of acidic sphingomyelinase activity, a substantial amount of neutral sphingomyelinase activity resides in caveolae of human skin fibroblasts. This caveolar neutral sphingomyelinase activity was also detected in Niemann-Pick disease type A fibroblasts, which are completely devoid of functional acidic sphingomyelinase. Neutral (but not acidic) sphingomyelinase activity was specifically inhibited by a peptide that corresponds to the scaffolding domain of caveolin, which suggests a direct molecular interaction between the two proteins. In addition, this finding implies a cytosolic orientation of the caveolar neutral sphingomyelinase. Interestingly, stimulation of fibroblasts with tumour necrosis factor alpha (TNFalpha) resulted in a partial shift of its p55 receptor to caveolin-enriched membrane fractions and the appearance of caveolin-sensitive neutral sphingomyelinase activity in the non-caveolar fractions. These results suggest that (part of) the presently identified caveolar neutral sphingomyelinase activity is involved in TNFalpha signalling.