The colonial ascidian Botryllus schlosseri continuously regenerates entire bodies in an asexual budding process. The germ line of the newly developing bodies is derived from migrating germ cell precursors, but the signals governing this homing process are unknown. Here we show that germ cell precursors can be prospectively isolated based on expression of aldehyde dehydrogenase and integrin alpha-6, and that these cells express germ cell markers such as vasa, pumilio and piwi, as well as sphingosine-1-phosphate receptor. In vitro, sphingosine-1-phosphate (S1P) stimulates migration of germ cells, which depends on integrin alpha-6 activity. In vivo, S1P signalling is essential for homing of germ cells to newly developing bodies. S1P is generated by sphingosine kinase in the developing germ cell niche and degraded by lipid phosphate phosphatase in somatic tissues. These results demonstrate a previously unknown role of the S1P signalling pathway in germ cell migration in the ascidian Botryllus schlosseri.