Sphingosine 1-phosphate (S1P) is a bioactive lipid molecule that acts both extracellularly and intracellularly. The SPL gene encodes a mammalian S1P lyase that degrades S1P. Here, we have disrupted the SPL gene in mouse F9 embryonal carcinoma cells by gene targeting. This is the first report of gene disruption of mammalian S1P lyase. The SPL-null cells exhibited no S1P lyase activity, and intracellular S1P was increased approximately 2-fold, compared with wild-type cells. Treatment of F9 embryonal carcinoma cells with retinoic acid induces differentiation to primitive endoderm (PrE). An acceleration in this PrE differentiation was observed in the SPL-null cells. This effect was apparently caused by the accumulated S1P, since N,N-dimethylsphingosine, a S1P synthesis inhibitor, had an inhibitory effect on the PrE differentiation. Moreover, F9 cells stably expressing sphingosine kinase also exhibited an acceleration in the differentiation. Exogenous S1P had no effect on differentiation, indicating that intracellular but not extracellular S1P is involved. Moreover, we determined that expression of the SPL protein is up-regulated during the progression to PrE. We also showed that sphingosine kinase activity is increased in PrE-differentiated cells. These results suggest that intracellular S1P has a role in the PrE differentiation and that SPL may be involved in the regulation of intracellular S1P levels during this differentiation.