Sphingosine-1-phosphate lyase is responsible for the ultimate step in sphingolipid breakdown, converting phosphorylated long chain bases into ethanolamine phosphate and a fatty aldehyde. Using tritiated dihydrosphingosine-1-phosphate, prepared enzymatically from [4,5-3H]dihydrosphingosylphosphocholine, we have reinvestigated the subcellular distribution of this enzyme in rat liver. Upon cell fractionation by differential centrifugation, the enzyme showed a microsomal distribution. Further separation of the microsomal fraction by sucrose gradient centrifugation confirmed an association with the endoplasmic reticulum. By means of constrained nonlinear regression, no evidence for a significant association with mitochondrial membranes, as reported previously (Stoffel, W., LeKim, D., and Sticht, G. (1969) Hoppe Seyler's Z. Physiol. Chem. 350, 1233-1241), nor with other cell compartments was found. The lyase activity, which appeared to be sensitive to different detergents, but not to Triton X-100, was not latent. It could be solubilized with Triton X-100, but not by high ionic strength, indicating that it is an integral membrane protein whose catalytic site is most probably exposed to the cytosol. Treatment of intact microsomal vesicles with trypsin or thermolysin inactivated the lyase activity, confirming that its catalytic site(s) or other domains essential for activity face the cytosol.