FTY720 is a novel immunomodulatory agent that inhibits lymphocyte trafficking and prevents allograft rejection. FTY720 is phosphorylated in vivo, and the phosphorylated drug acts as agonist for a family of G protein- coupled receptors that recognize sphingosine 1- phosphate. Evidence suggests that FTY720- phosphate- induced activation of S1P(1) is responsible for its mechanism of action. FTY720 was rationally designed by modification of myriocin, a naturally occurring sphingoid base analog that causes immunosuppression by interrupting sphingolipid metabolism. In this study, we examined interactions between FTY720, FTY720- phosphate, and sphingosine- 1- phosphate lyase, the enzyme responsible for irreversible sphingosine 1- phosphate degradation. FTY720- phosphate was stable in the presence of active sphingosine1- phosphate lyase, demonstrating that the lyase does not contribute to FTY720 catabolism. Conversely, FTY720 inhibited sphingosine- 1- phosphate lyase activity in vitro. Treatment of mice with FTY720 inhibited tissue sphingosine1- phosphate lyase activity within 12 h, whereas lyase gene and protein expression were not significantly affected. Tissue sphingosine 1- phosphate levels remained stable or increased throughout treatment. These studies raise the possibility that disruption of sphingosine 1- phosphate metabolism may account for some effects of FTY720 on immune function and that sphingosine1- phosphate lyase may be a potential target for immunomodulatory therapy.