Sphingosine− 1− phosphate (S1P) is a naturally occurring bioactive lipid that regulates angiogenesis, endothelial barrier function and motility. S1P mediates its cellular functions extracellularly through G− protein coupled and intracellularly via mechanisms yet to be defined. We have shown earlier that intracellular S1P levels in lung endothelial cells are regulated by sphingosine kinases, S1P phosphatases and S1P lyase (SPL). This study provides the first evidence that regulation of intracellular S1P levels by SPL regulates lipopolysaccharide (LPS)− induced lung inflammation and injury in a murine model of acute lung injury (ALI) and in human lung microvascular endothelial cells (HLMVECs). Treatment of HLMVECs with LPS (100 ng/ml for 30 and 60 min) reduced intracellular S1P levels as determined by LC− MS/MS while LPS challenge increased mRNA and protein expression of SPL. LPS treatment of HLMVECs, in a time− and dose− dependent fashion, stimulated NF− KB activation and IL− 6 secretion, and inhibition of NF− KB by Bay11− 7082 attenuated LPS− induced IL− 6 secretion. Downregulation of SPL expression by siRNA attenuated LPS− mediated phosphorylation of p38 MAPK and I− KB and IL− 6 secretion while over− expression of SPL enhanced LPS− induced phosphorylation of I− KB and IL− 6 secretion. Intratracheal instillation of LPS (5 mg/kg) induced neutrophil influx and IL− 6 secretion in bronchoalveolar lavage fluids in a murine model of ALI; however, SPL+/− knockout mice showed reduced IL− 6 secretion and neutrophil recruitment in BAL fluids. LPS regulates SPL expression and intracellular S1P levels in HLMVECs, and down− regulation of SPL attenuated LPS− induced activation of NF− KB and IL− 6 secretion. These data suggest a novel role of SPL in regulating LPS− induced lung injury.