We have previously seen that protein kinase C (PKC) epsilon induces neurite outgrowth and that PKCdelta and PKCtheta elicit apoptosis in neuroblastoma cells. In this study we investigate the effects of cell-permeable C(2)-ceramide on these events in SK-N-BE(2) neuroblastoma cells. C(2)-ceramide abolishes neurite formation induced by overexpression of PKCepsilon and, in cells overexpressing PKCdelta or PKCtheta, ceramide treatment leads to apoptosis. Exposure to C(2)-ceramide also suppressed neurite outgrowth induced by retinoic acid, but ceramide did not abrogate neurite induction by treatment with the ROCK inhibitor Y-27632, demonstrating that C(2)-ceramide is not a general inhibitor of neurite outgrowth. The neurite-suppressing effect occurs independently of cell-death. Furthermore, C(2)-ceramide relocated PKCepsilon and the isolated regulatory domain of PKCepsilon from the cytosol to the perinuclear region. In contrast, neither the localization of PKCdelta nor of PKCtheta was affected by C(2)-ceramide. Taken together, the data indicate that the neurite-inhibiting effect of C(2)-ceramide treatment may be caused by a re-localization of PKCepsilon and thus identify a functional consequence of ceramide effects on PKCepsilon localization.