Despite advances in the field, colorectal cancer (CRC) remains a leading cause of cancer-related mortality worldwide. Research into bioactive sphingolipids over the past two decades has played an important role in increasing our understanding of the pathogenesis and therapeutics of CRC. In the complex metabolic network of sphingolipids, ceramidases (CDases) have a key function. These enzymes hydrolyze ceramides into sphingosine (SPH) which in turn is phosphorylated by sphingosine kinases (SK) 1 and 2 to generate sphingosine-1 phosphate (S1P). Importantly, we have recently shown that inhibition of neutral CDase (nCDase) induces an increase of ceramide in colon cancer cells which decreases cellular growth, increases apoptosis and modulates the WNT/β-catenin pathway. We have also shown that the deletion of nCDase protected mice from the onset and progression of colorectal cancer in the AOM carcinogen model. Here, we demonstrate that AKT is a key target for the growth suppressing functions of ceramide. The results show that inhibition of nCDase activates GSK3β through dephosphorylation, and thus is required for the subsequent phosphorylation and degradation of β-catenin. Our findings show that inhibition of nCDase also inhibits the basal activation status of AKT, and we further establish that a constitutively active AKT (AKT T308D, S473D; AKTDD) reverses the effect of nCDase on β-catenin degradation. Functionally, the AKTDD mutant is able to overcome the growth suppressive effects of nCDase inhibition in CRC cells. Moreover, nCDase inhibition induces a growth delay of xenograft tumors from control cells, whereas xenograft tumors from constitutively active AKT cells become resistant to nCDase inhibition. Taken together, these results provide important mechanistic insight into how nCDase regulates cell proliferation. These findings demonstrate a heretofore unappreciated, but critical, role for nCDase in enabling/maintaining basal activation of AKT and also suggest that nCDase is a suitable novel target for colon cancer therapy.