Aggregation and retention of LDL in the arterial wall are key events in atherogenesis, but the mechanisms in vivo are not known. Previous work from our laboratories has shown that exposure of LDL to bacterial sphingomyelinase (SMase) in vitro leads to the formation of LDL aggregates that can be retained by extracellular matrix and that are able to stimulate macrophage foam cell formation. We now provide evidence that retained LDL is hydrolyzed by an arterial-wall SMase activity. First, we demonstrated that SMase-induced aggregation is caused by an increase in particle ceramide content, even in the presence of excess sphingomyelin (SM). This finding is compatible with previous data showing that lesional LDL is enriched in SM, though its ceramide content has not previously been reported. To address this critical compositional issue, the ceramide content of lesional LDL was assayed and, remarkably, found to be 10-50-fold enriched compared with plasma LDL ceramide. Furthermore, the ceramide was found exclusively in lesional LDL that was aggregated; unaggregated lesional LDL, which accounted for 20-25% of the lesional material, remained ceramide poor. When [3H]SM-LDL was incubated with strips of rabbit aorta ex vivo, a portion of the LDL was retained, and the [3H]SM of this portion, but not that of unretained LDL, was hydrolyzed to [3H]ceramide by a nonlysosomal arterial hydrolase. In summary, LDL retained in atherosclerotic lesions is acted upon by an arterial-wall SMase, which may participate in LDL aggregation and possibly other SMase-mediated processes during atherogenesis.