Degradation of membrane-bound sphingomyelin to phosphorylcholine and ceramide is catalyzed by the water-soluble lysosomal acid sphingomyelinase (A-SMase). The presence of sphingolipid activator proteins (Saps: saposins A-D; GM2 activator) is not essential to mediate this reaction at the water-lipid interface in vivo . A hypothesis based on amino acid sequence alignments suggests that the enzyme possesses an N-terminal saposin-homologous domain, which may facilitate the enzymatic reaction at the interface. We mutated one homologous and three conserved amino acid residues of this domain and studied the activity of the variant enzymes using different sphingomyelin degradation assays. A variant with an exchange of a conserved amino acid residue, Pro153Ala, still exhibited enzyme activity of approximately 52% of normal in a detergent-containing micellar assay, but only 13% of normal in a detergent-free liposomal assay system, which suggests that the Sap-homologous domain fulfills membrane-disturbing functions. Addition of saposin C to the liposomal assay mixtures increased the Pro153Ala variant sphingomyelinase activity to 46% of normal, indicating that the variant saposin-like domain can be substituted by the presence of the sphingolipid activator protein. On the other hand, the addition of saposin C did not result in complete restoration of the variant activity. Thus, the Sap-like domain may also have another role, e.g., to stabilize the fold of acid sphingomyelinase, which cannot be compensated by the presence of saposin C or a detergent. Such an essential second function of the saposin-like domain as an integral part of acid sphingomyelinase is confirmed by our observation that the Lys118Glu, Cys120Ser and Cys131Ser variants were almost completely devoid of activity in the detergent-containing micellar assay system as well as in the liposomal assay system in the presence of saposin C.