Sphingomyelin synthase (SMS) catalyzes the formation of sphingomyelin, a major component of the plasma membrane and lipid rafts. To investigate the role of SMS in cell signaling and migration induced by binding of the chemokine CXCL12 to CXCR4, we used mouse embryonic fibroblasts deficient in SMS1 and/or SMS2 and examined the effects of SMS deficiency on cell migration. SMS deficiency promoted cell migration through a CXCL12/CXCR4-dependent signaling pathway involving extracellular signal-regulated kinase (ERK) activation. In addition, SMS1/SMS2 double-knockout cells had heightened sensitivity to CXCL12, which was significantly suppressed upon transfection with the SMS1 or SMS2 gene or when they were treated with exogenous sphingomyelin but not when they were treated with the SMS substrate ceramide. Notably, SMS deficiency facilitated relocalization of CXCR4 to lipid rafts, which form platforms for the regulation and transduction of receptor-mediated signaling. Furthermore, we found that SMS deficiency potentiated CXCR4 dimerization, which is required for signal transduction. This dimerization was significantly repressed by sphingomyelin treatment. Collectively, our data indicate that SMS-derived sphingomyelin lowers responsiveness to CXCL12, thereby reducing migration induced by this chemokine. Our findings provide the first direct evidence for an involvement of SMS-generated sphingomyelin in the regulation of cell migration.