Sphingosine-1-phosphate (S1P) is a bioactive sphingolipid that acts as both an extracellular ligand for the endothelial differentiation gene-1 (EDG-1) G-protein coupled receptor (GPCR) family and as an intracellular messenger. Cellular levels of S1P are low and tightly regulated in a spatial-temporal manner not only by sphingosine kinase (SPHK) but also by degradation catalyzed by S1P lyase, specific S1P phosphohydrolases, and by general lipid phosphate phosphohydrolases (LPPs). LPPs are characterized as magnesium-independent, insensitive to inhibition by N-ethylmaleimide (NEM) and possessing broad substrate specificity with a variety of phosphorylated lipids, including S1P, phosphatidic acid (PA), and lysophosphatidic acid (LPA). LPPs contain three highly conserved domains that define a phosphohydrolase superfamily. Recently, several specific S1P phosphohydrolases have been identified in yeast and mammalian cells. Phylogenetic and biochemical analyses indicate that these enzymes constitute a new subset of the LPP family. As further evidence, S1P phosphohydrolases exhibit high specificity for phosphorylated sphingoid bases. Enforced expression of S1P phosphohydrolase alters the cellular levels of sphingolipid metabolites in yeast and mammalian cells, increasing sphingosine and ceramide, bioactive sphingolipids that often have opposing biological actions to S1P. By regulating the cellular ratio between ceramide/sphingosine and S1P, S1P phosphohydrolase is poised to be a critical factor in cell survival/cell death decisions. Indeed, expression of S1P phosphohydrolase in mammalian cells increases apoptosis, whereas deletion of S1P phosphohydrolases in yeast correlates with resistance to heat stress. In this review, we discuss the role of phosphohydrolases in the metabolism of S1P and how turnover of S1P can regulate sphingolipid metabolites signaling.