Ceramidases catalyze the hydrolysis of ceramides to generate sphingosine (SPH) and fatty acids, and ceramide metabolism is implicated in various biological responses in Drosophila melanogaster. Here we report the cloning, biochemical characterization, and functional analysis of a Drosophila alkaline ceramidase (Dacer). Dacer, a membrane-bound protein of 284 amino acids, shares homology with yeast and mammalian alkaline ceramidases. Overexpression of Dacer in High Five insect cells increases ceramidase activity in the alkaline pH range, indicating that Dacer is a bona fide alkaline ceramidase. Dacer mRNA is highly expressed in the midgut and at the pupal stage. An inactivation of Dacer by insertional mutagenesis increases the levels of ceramides in both Drosophila pupae and adult flies. Dacer inactivation increases Drosophila pre-adult development time, lifespan, and anti-oxidative stress capacity. Collectively, these results suggest that Dacer plays an important role in the Drosophila development and longevity by controlling the metabolism of ceramides.