Ceramides inhibit phospholipase D (PLD) activity in several mammalian cell types. These effects have been related to preventing activation by ARF1, RhoA, and protein kinase C-alpha and -beta and therefore indicate that PLD1 is inhibited. In the present work, we investigated the effects of ceramides in inhibiting both PLD1 and PLD2 and the interaction with another activator, phosphatidylinositol 4,5-bisphosphate (PIP2). PLD1 and PLD2 were overexpressed separately in Sf9 insect cells using baculovirus vectors. In our cell-free system, PLD1 activity was inhibited completely by C2-ceramide at sub-optimum concentrations of PIP2 (3 and 6 microM), whereas at supra-optimum PIP2 concentrations (18 and 24 microM) C2-ceramide did not inhibit PLD1 activity. Partially purified PLD2 exhibited an absolute requirement for PIP2 when the activity was measured using Triton X-100 micelles. Ceramides inhibited PLD2 activity, and this inhibition was decreased as PIP2 concentrations increased. However, C2-ceramide also reversibly inhibited the activity of PLD1 and PLD2 mutants in which binding of PIP2 was decreased, indicating that ceramides are interacting with the catalytic core of the mammalian PLDs. By contrast, C2-ceramide failed to produce a significant inhibition of PLDs from bacteria and plants. Our results provide a novel demonstration that ceramides reversibly inhibit mammalian PLD2 as well as PLD1 activities and that both of these actions are more pronounced when PIP2 concentrations are rate-limiting.