Duchenne muscular dystrophy (DMD) is a congenital myopathy caused by mutations in the dystrophin gene. DMD pathology is marked by myositis, muscle fiber degeneration, and eventual muscle replacement by fibrosis and adipose tissue. Satellite cells (SC) are muscle stem cells critical for muscle regeneration. Sphingosine-1-phosphate (S1P) is a bioactive sphingolipid that promotes SC proliferation, regulates lymphocyte trafficking, and is irreversibly degraded by sphingosine phosphate lyase (SPL). Here, we show that SPL is virtually absent in normal human and murine skeletal muscle but highly expressed in inflammatory infiltrates and degenerating fibers of dystrophic DMD muscle. In mdx mice that model DMD, high SPL expression is correlated with dysregulated S1P metabolism. Perinatal delivery of the SPL inhibitor LX2931 to mdx mice augmented muscle S1P and SC numbers, reduced leukocytes in peripheral blood and skeletal muscle, and attenuated muscle inflammation and degeneration. The effect on SC was also observed in SCID/mdx mice that lack mature T and B lymphocytes. Transcriptional profiling in the skeletal muscles of LX2931-treated vs. control mdx mice demonstrated changes in innate and adaptive immune functions, plasma membrane interactions with the extracellular matrix (ECM), and axon guidance, a known function of SC. Our cumulative findings suggest that by raising muscle S1P and simultaneously disrupting the chemotactic gradient required for lymphocyte egress, SPL inhibition exerts a combination of muscle-intrinsic and systemic effects that are beneficial in the context of muscular dystrophy.