In certain cell systems, including neonatal vascular smooth muscle (VSM) cells, phorbol esters are growth inhibitory. Here we show that 1,2-dioctanoyl-sn-glycerol (DiC8), when added 2 h after alpha-thrombin, reverses by greater than 95% the induction of DNA synthesis in VSM cells by alpha-thrombin. Sphingosine, a naturally occurring lysosphingolipid inhibitor of protein kinase C, and its synthetic analogues N-acetylsphingosine and C11-sphingosine were used to investigate this phenomenon further. Neither phorbol 12-myristate 13-acetate (PMA;200 ng/ml) nor sphingosine (up to 10 microM) alone had any effect upon basal DNA synthesis in VSM cells. Like DiC8, PMA totally blocked the induction of DNA synthesis by alpha-thrombin. This inhibitory effect of PMA was reversed by sphingosine in a dose-dependent manner with complete reversal at 10 microM. Neither N-acetylsphingosine nor C11-sphingosine exhibited any effect on DNA synthesis in VSM cells. The effect of sphingosine and its analogues on the activity of protein kinase C extracted from VSM cells was measured by histone III-S phosphorylation. Protein kinase C activity was inhibited 50% by 300 microM sphingosine, but less than 15% by similar concentrations of N-acetylsphingosine and C11-sphingosine. To assess the effects of sphingosine and analogues on protein kinase C in intact cells, we examined the effect of the lipids on [3H]phorbol dibutyrate binding. Sphingosine (at greater than 5 microM), but not N-acetylsphingosine or C11-sphingosine, blocked [3H]phorbol dibutyrate binding in a dose- and time-dependent fashion. Thus the mechanism of growth inhibition by DiC8 and PMA in neonatal VSM cells appears to be through activation of protein kinase C by these compounds. Sphingosine reverses this growth inhibition through interference with the binding to protein kinase C of phorbol esters or other activators of this enzyme.