Recently we showed that, in human breast cancer cells, activation of protein kinase C by 4beta-phorbol 12-myristate 13-acetate (PMA) produced ceramide formed from the salvage pathway (Becker, K. P., Kitatani, K., Idkowiak-Baldys, J., Bielawski, J., and Hannun, Y. A. (2005) J. Biol. Chem. 280, 2606-2612). In this study, we investigated intracellular signaling events mediated by this novel activated pathway of ceramide generation. PMA treatment resulted in transient activation of mitogen-activated protein kinases (ERK1/2, JNK1/2, and p38) followed by dephosphorylation/inactivation. Interestingly, fumonisin B1 (FB1), an inhibitor of the salvage pathway, attenuated loss of phosphorylation of p38, suggesting a role for ceramide in p38 dephosphorylation. This was confirmed by knock-down of longevity-assurance homologue 5, which partially suppressed the formation of C(16)-ceramide induced by PMA and increased the phosphorylation of p38. These results demonstrate a role for the salvage pathway in feedback inhibition of p38. To determine which protein phosphatases act in this pathway, specific knock-down of serine/threonine protein phosphatases was performed, and it was observed that knock-down of protein phosphatase 1 (PP1) catalytic subunits significantly increased p38 phosphorylation, suggesting activation of PP1 results in an inhibitory effect on p38. Moreover, PMA recruited PP1 catalytic subunits to mitochondria, and this was significantly suppressed by FB1. In addition, phospho-p38 resided in PMA-stimulated mitochondria. Upon PMA treatment, a mitochondria-enriched/purified fraction exhibited significant increases in C(16)-ceramide, a major ceramide specie, which was suppressed by FB1. Taken together, these data suggest that accumulation of C(16)-ceramide in mitochondria formed from the protein kinase C-dependent salvage pathway results at least in part from the action of longevity-assurance homologue 5, and the generated ceramide modulates the p38 cascade via PP1.