Sphingosine-1-phosphate (S1P) is a lipid-signaling molecule produced by sphingosine kinase in response to a wide number of stimuli. By acting through a family of widely expressed G protein-coupled receptors, S1P regulates diverse physiological processes. Here we examined the role of S1P signaling in neurodegeneration using a mouse model of Sandhoff disease, a prototypical neuronopathic lysosomal storage disorder. When sphingosine kinase 1 (Sphk1) was deleted in Sandhoff disease mice, a milder disease course occurred, with decreased proliferation of glial cells and less-pronounced astrogliosis. A similar result of milder disease course and reduced astroglial proliferation was obtained by deletion of the gene for the S1P(3) receptor, a G protein-coupled receptor enriched in astrocytes. Our studies demonstrate a functional role of S1P synthesis and receptor expression in astrocyte proliferation leading to astrogliosis during the terminal stages of neurodegeneration in Sandhoff disease mice. Because astrocyte responses are involved in many types of neurodegeneration, the Sphk1/S1P receptor signaling axis may be generally important during the pathogenesis of neurodegenerative diseases.