In granulosa cells labeled to isotopic steady-state with [3H]serine, addition of interleukin-1 beta (IL1 beta) or bacterial sphingomyelinase (SMase) induced a rapid decrease (approximately 60% by 10 min) in cellular [3H]Sphingomyelin content and a prolonged generation (up to 60 min) of [3H]ceramide, the immediate lipid-moiety generated in response to sphingomyelin hydrolysis. In FSH-treated cells, IL1 beta (0.3-30 ng/ml) inhibited progesterone biosynthesis in a dose-dependent manner, an effect that was also observed in cells exposed to increasing concentrations of bacterial SMase (0.003-0.3 U/ml) or the membrane-permeable ceramide analogue N-hexanoylsphingosine (C6-cer:0.1-10 microM). Abrogation of progesterone biosynthesis was not a sole consequence of inadequate cAMP biosynthesis because cyclic nucleotide levels remained elevated (3- to 4-fold over untreated cultures) after addition of IL1 beta, SMase, or two different cell permeable ceramide analogues (C2-cer and C6-cer) to gonadotropin-stimulated granulosa cells. Moreover, taken into account that exogenous SMase or C6-cer partially abolished progesterone biosynthesis induced by But2cAMP (0.5 mM) or cholera toxin (CTX: 1 microgram/ml), the above mentioned results support the notion that activation of the sphingomyelin pathway exerts its inhibitory effects on granulosa cell steroidogenic activity at site(s) of action both proximal and distal to cAMP generation. As determined by RT-PCR analysis, the inhibitory effect of IL1 beta, SMase, or C6-cer on gonadotropin-stimulated steroidogenesis was accompanied by arrested transcription of the mitochondrial cholesterol side chain cleavage enzyme (P450scc) and 3 beta-hydroxysteroid dehydrogenase/delta 5-4isomerase, the two FSH-inducible steps involved in progesterone biosynthesis. Although bacterial SMase or the ceramide analogue C6-cer alone did not exactly reproduce the effect of IL1 beta on granulosa cell prostaglandin E2 (PGE2) biosynthesis, both agents augmented net PGE2 production and messenger RNA levels of the inducible prostaglandin endoperoxide synthase/cyclooxygenase (PGHS-2) in cytokine-treated cells. Although the effect on PGHS-2 messenger RNA may account for the facilitatory role of ceramide on IL1 beta-induced PGE2 biosynthesis, neither SMase nor the membrane-permeant ceramide analogue were able to augment prostaglandin accumulation in the presence of exogenously added arachidonate precursor. Collectively, whereas these results show that ceramide triggers a negative-effector pathway that is both necessary and sufficient to reproduce the inhibitory effect of IL1 beta on FSH-stimulated granulosa cell steroidogenesis, they also support the notion that sphingomyelin hydrolysis may be important for cytokine-induced PGHS-2 expression but not sufficient to reproduce IL1 beta-stimulated PGE2 biosynthesis.