Lipid phosphates are potent mediators of cell signaling and control processes including development, cell migration and division, blood vessel formation, wound repair, and tumor progression. Lipid phosphate phosphatases (LPPs) regulate the dephosphorylation of lipid phosphates, thus modulating their signals and producing new bioactive compounds both at the cell surface and in intracellular compartments. Knock-down of endogenous LPP2 in fibroblasts delayed cyclin A accumulation and entry into S-phase of the cell cycle. Conversely, overexpression of LPP2, but not a catalytically inactive mutant, caused premature S-phase entry, accompanied by premature cyclin A accumulation. At high passage, many LPP2 overexpressing cells arrested in G(2)/M and the rate of proliferation declined severely. This was accompanied by changes in proteins and lipids characteristic of senescence. Additionally, arrested LPP2 cells contained decreased lysophosphatidate concentrations and increased ceramide. These effects of LPP2 activity were not reproduced by overexpression or knock-down of LPP1 or LPP3. This work identifies a novel and specific role for LPP2 activity and bioactive lipids in regulating cell cycle progression.