Sphingosine-1-phosphate (S1P) is a bioactive lysosphingolipid implicated in mitogenesis and cytoskeletal remodelling, but its mechanism of action is poorly understood. We report here that in N1E-115 neuronal cells, S1P mimics the G protein-coupled receptor agonist lysophosphatidic acid (LPA) in rapidly inducing neurite retraction and soma rounding, a process driven by Rho-dependent contraction of the actin cytoskeleton. S1P is approximately 100-fold more potent than LPA in evoking these shape changes, with an EC50 as low as 1.5 nM. Microinjection of S1P has no effect, neither has addition of sphingosine or ceramide. As with LPA, S1P action is inhibited by suramin and subject to homologous desensitization; however, the responses to S1P and LPA do not show cross-desensitization. We conclude that S1P activates its own high affinity receptor to trigger Rho-regutated cytoskeletal events. Thus, S1P and LPA may belong to an emerging family of bioactive lysophospholipids that act through distinct G protein-coupled receptors to mediate similar actions.