Resting T cells require a signal transduced through their antigen-specific T-cell receptor (TCR) and an antigen-independent costimulatory signal in order to proliferate and become activated. Ligation of the CD28 receptor costimulates T-cell proliferation and is critical to correct T-cell function. A putative effector of CD28-mediated costimulation is the sphingomyelinase enzyme, which generates the potent second messenger ceramide. We have examined the role of sphingomyelinase and C2 ceramide for their ability to costimulate resting human T cells. We observed that neither sphingomyelinase nor C2 ceramide could costimulate human T-cell proliferation in combination with anti-CD3 antibody, whereas CD80, a natural CD28 ligand, was strongly costimulatory. Surprisingly, both sphingomyelinase and C2 ceramide strongly inhibited the proliferation of resting T cells stimulated through TCR and CD28 receptors. Despite these inhibitory effects, neither sphingomyelinase nor C2 ceramide induced apoptosis and we found that upregulation of activation markers CD25 and CD69 could still occur in the presence of sphingomyelinase/C2 ceramide. These data indicate that neither sphingomyelinase nor C2 ceramide can substitute for CD28 costimulation and that these molecules may be involved in negatively regulating T-cell proliferation.