The dependence of some cell types on serum factors for growth may represent a powerful, but poorly studied, model for antimitogenic pathways. In this study, we examine ceramide as a candidate intracellular mediator of serum factor dependence. In Molt-4 leukemia cells, serum withdrawal caused a significant arrest in cell cycle progression (80% of cells in G0/G1), accompanied by a modest apoptotic cell death (12%). Serum deprivation of these cells resulted in significant sphingomyelin hydrolysis (72%; corresponding to hydrolysis of 47 pmol/nmol phosphate), which was accompanied by a profound and progressive elevation (up to 10-15-fold) in endogenous levels of ceramide. Withdrawal of serum caused the activation of a distinct, particulate, and magnesium-dependent sphingomyelinase. The addition of exogenous C6-ceramide induced a dramatic arrest in the G0/G1 phase of the cell cycle comparable to the effects observed with serum withdrawal, albeit occurring much sooner. Unlike serum withdrawal, however, the addition of C6-ceramide resulted in more pronounced apoptosis. Because of the previously noted ability of exogenously added phorbol esters to inhibit ceramide-mediated apoptosis, we investigated the hypothesis that endogenous activation of the diacylglycerol/protein kinase C pathway may modulate the response to serum withdrawal. Indeed, serum withdrawal resulted in 3-4-fold elevation in endogenous diacylglycerol levels. The addition of exogenous diacylglycerols resulted in selective attenuation of ceramide's effects on apoptosis but not on cell cycle arrest. Thus, the combination of ceramide and diacylglycerol recapitulated the complex effects of serum withdrawal on cell cycle arrest and apoptosis. These studies identify a novel role for ceramide in cell cycle regulation, and they may provide the first evidence for an intracellular signal transduction pathway in mammalian cells mediating cell cycle arrest. These studies also underscore the importance of lipid second messengers and the significance of the interplay between glycerolipid-derived and sphingolipid-derived lipid mediators.