In yeast, Tsc10p catalyzes reduction of 3-ketosphinganine to dihydrosphingosine. In mammals, it has been proposed that this reaction is catalyzed by FVT1, which despite limited homology and a different predicted topology, can replace Tsc10p in yeast. Silencing of FVT1 revealed a direct correlation between FVT1 levels and reductase activity, showing that FVT1 is the principal 3-ketosphinganine reductase in mammalian cells. Localization and topology studies identified an N-terminal membrane-spanning domain in FVT1 (absent in Tsc10p) oriented to place it in the endoplasmic reticulum (ER) lumen. In contrast, protease digestion studies showed that the N terminus of Tsc10p is cytoplasmic. Fusion of the N-terminal domain of FVT1 to green fluorescent protein directed the fusion protein to the ER, demonstrating that it is sufficient for targeting. Although both proteins have two predicted transmembrane domains C-terminal to a cytoplasmic catalytic domain, neither had an identifiable lumenal loop. Nevertheless, both Tsc10p and the residual fragment of FVT1 produced by removal of the N-terminal domain with factor Xa protease behave as integral membrane proteins. In addition to their topological differences, mutation of conserved catalytic residues had different effects on the activities of the two enzymes. Thus, while FVT1 can replace Tsc10p in yeast, there are substantial differences between the two enzymes that may be important for regulation of sphingolipid biosynthesis in higher eukaryotes.