Long-chain (sphingoid) bases may serve as another category of "lipid second messenger" because they inhibit protein kinase C and affect multiple cellular functions. Free sphingosine has been found in rat liver (Merrill, A. H., Jr., Wang, E., Mullins, R. E., Jamison, W. C. L., Nimkar, S., and Liotta, D. C. (1988) Anal. Biochem. 171, 373-381); hence, this study determined if liver plasma membranes contain free long-chain bases and have the ability to form them from endogenous enzymes and substrates. Isolated plasma membranes contained 0.45 nmol of sphingosine/mg of protein which, based on the recovery of the membranes, was equivalent to 3.5 +/- 1.2 nmol/g of liver and at least half of the total free sphingosine in liver. When the membranes were incubated at 37 degrees C, the amount increased at an initial rate of 5-25 pmol/min/mg, resulting in a 2-3-fold increase over an hour. Sphingosine formation required divalent cations, was optimal at neutral to alkaline pH, and was temperature-dependent. Activities with these characteristics were not identified in microsomes or lysosomes (lysosomal activities with acidic pH optima were detected, however); hence, they appear to reflect a separate plasma membrane system. Sphingosine formation was stimulated by ceramides either added exogenously or formed endogenously by treating the membranes with sphingomyelinase (but not endoglycoceramidase). Sphingomyelin hydrolysis to ceramide was also observed during incubation of the plasma membranes alone. Some of the properties of this system resembled the neutral sphingomyelinase and ceramidase activities of liver. While the physiological significance of this endogenous sphingosine is not known, this system has the appropriate subcellular location to provide sphingosine as a participant in signal transduction.