Acid sphingomyelinase (ASM) regulates the homeostasis of sphingolipids, including ceramides and sphingosine-1-phosphate (S1P). Because sphingolipids regulate AKT activation, we investigated the role of ASM in hepatic glucose and lipid metabolism. Initially, we overexpressed ASM in the livers of wild-type and diabetic db/db mice by adenovirus vector (Ad5ASM). In these mice, glucose tolerance was improved, and glycogen and lipid accumulation in the liver were increased. Using primary cultured hepatocytes, we confirmed that ASM increased glucose uptake, glycogen deposition, and lipid accumulation through activation of AKT and glycogen synthase kinase-3β. In addition, ASM induced up-regulation of glucose transporter 2 accompanied by suppression of AMP-activated protein kinase (AMPK) phosphorylation. Loss of sphingosine kinase-1 (SphK1) diminished ASM-mediated AKT phosphorylation, but exogenous S1P induced AKT activation in hepatocytes. In contrast, SphK1 deficiency did not affect AMPK activation. These results suggest that the SphK/S1P pathway is required for ASM-mediated AKT activation but not for AMPK inactivation. Finally, we found that treatment with high-dose glucose increased glycogen deposition and lipid accumulation in wild-type hepatocytes but not in ASM(-/-) cells. This result is consistent with glucose intolerance in ASM(-/-) mice. In conclusion, ASM modulates AKT activation and AMPK inactivation, thus regulating glucose and lipid metabolism in the liver.