Prior studies showed that sphingomyelinase action and the free sphingoid bases inhibited protein kinase C (Kolesnick, R. N., and Clegg, S. (1988) J. Biol. Chem. 263, 6534-6537). The present studies investigated whether sphingomyelinase action also inhibited a biologic process mediated via protein kinase C, phorbol ester-induced differentiation of HL-60 promyelocytic cells into macrophages. The potent phorbol ester 12-O-tetradecanoylphorbol 13-acetate (TPA) stimulated time- and concentration-dependent conversion of HL-60 cells into macrophages, ED50 congruent to 5 x 10(-10) M. Differentiation involved growth inhibition, adherence of the suspended cells to tissue culture plastic, morphologic changes, and development of specific enzymatic markers. Sphingomyelinase, which increased the level of sphingoid bases and inactivated protein kinase C, prevented this event. In control incubations, cell number increased 2.10-fold over 24 h, and 2 +/- 1% of the cells were adherent. In incubations with TPA (0.5 nM), cell number increased only 1.75-fold, and 30% were adherent. Sphingomyelinase (3.8 x 10(-5) unit/ml) restored growth to incubations containing TPA to 2.02-fold and reduced adherence to 15%. Sphingomyelinase (3.8 x 10(-2) unit/ml) also restored growth partially and reduced adherence to a maximal concentration of TPA (3 nM). Similar results were obtained with the sphingoid base sphingosine (3-4.5 microM). Sphingomyelinase antagonized the morphologic changes associated with conversion to the macrophage phenotype. Untreated HL-60 cells presented typical promyelocytic morphology with large nuclei, little cytoplasm, and uniformity of nuclear and cell shape. TPA induced a larger cell population with abundant cytoplasm and unusual shape. Sphingomyelinase prevented these changes. Sphingomyelinase blocked TPA-induced increases in the macrophage marker enzymes, acid phosphatase and alpha-naphthyl acetate esterase. These studies indicate that the action of a sphingomyelinase, like the sphingoid bases, blocks phorbol ester-induced differentiation of HL-60 cells into macrophages and provides further support for the concept that sphingomyelinase action may be sufficient to comprise a physiologically relevant inhibitory pathway for protein kinase C.