Sphingosine phosphate lyase 1 (SGPL1) is a highly conserved enzyme that irreversibly degrades sphingosine-1-phosphate (S1P). Sgpl1-knockout mice fail to develop germ cells, resulting in infertility. However, the molecular mechanism remains unclear. The results of the present study showed that SGPL1 was expressed mainly in granulosa cells, Leydig cells, spermatocytes, and round spermatids. Sgpl1 deletion led to S1P accumulation in the gonads. In the ovary, S1P decreased natriuretic peptide receptor 2 (NPR2) activity in granulosa cells and inhibited early follicle growth. In the testis, S1P increased the levels of cyclin-dependent kinase inhibitor 1A (p21) and apoptosis in Leydig cells, thus resulting in spermatogenesis arrest. These results indicate that Sgpl1 deletion increases intracellular S1P levels, resulting in the arrest of female and male germ cell development via different signaling pathways.