Early events required for induction of apoptosis by CD95 are preassociation of CD95, the formation of the death-inducing signaling complex (DISC) and clustering of CD95 in distinct membrane domains. Here, we identify the molecular ordering of these events and show that the acid sphingomyelinase (ASM) functions upstream of the DISC to mediate CD95 clustering in ceramide-enriched membrane platforms, an event that is required for DISC formation. Experiments in ASM-deficient cells revealed that CD95 ligation, in the absence of ceramide generation, triggers <1% of full caspase 8 activation at the receptor. This event, however, is both necessary and sufficient to trigger translocation of ASM onto the outer leaflet of the plasma membrane, ASM activation and ceramide release, but insufficient for apoptosis induction. Ceramide-mediated CD95 clustering then amplifies the primary CD95 signaling and drives the second step of CD95 signaling, that is, formation of the DISC yielding 100% caspase activity and apoptosis. These studies suggest that the most parsimonious interpretation of the molecular ordering of the earliest events in CD95 signaling, at least in some cells, is: CD95 ligation-->1% of maximum caspase 8 activation-->ASM translocation-->ceramide generation-->CD95 clustering-->DISC formation-->100% of maximum caspase 8 activation-->apoptosis.