In mammals, the primitive ectoderm is an epithelium of polarized cells that differentiates into all embryonic tissues. Our study shows that in primitive ectoderm cells, the sphingolipid ceramide was elevated and co-distributed with the small GTPase Cdc42 and cortical F-actin at the apicolateral cell membrane. Pharmacological or RNA interference-mediated inhibition of ceramide biosynthesis enhanced apoptosis and impaired primitive ectoderm formation in embryoid bodies differentiated from mouse embryonic stem cells. Primitive ectoderm formation was restored by incubation with ceramide or a ceramide analog. Ceramide depletion prevented plasma membrane translocation of PKC/, its interaction with Cdc42, and phosphorylation of GSK-3, a substrate of PKC/. Recombinant PKC formed a complex with the polarity protein Par6 and Cdc42 when bound to ceramide containing lipid vesicles. Our data suggest a novel mechanism by which a ceramide-induced, apicolateral polarity complex with PKC/ regulates primitive ectoderm cell polarity and morphogenesis.Our studies have shown that the membrane sphingolipid ceramide regulates apoptosis during embryonic stem (ES) 3 cell differentiation (1-5). This regulation is initiated by direct physical interaction of ceramide with atypical PKC or (5). Homozygous knock-out of PKC in mice results in lethality at embryonic day 9 because of severe defects of post-gastrulation morphology (6). This suggests that atypical PKCs are critical for aspects of early embryonic development, although the degree of functional overlap as well as specific effects and regulation of the two isoforms are not known yet. Our results obtained with ES cells suggest that ceramide-dependent regulation of atypical PKCs contributes to the function of PKC/ during embryonic development.In the pregastrulation embryo, inner cell mass-derived cells give rise to two adjacent epithelia of polarized cells, the primitive endoderm and the underlying primitive ectoderm. The formation of the primitive ectoderm is followed by the removal of cells that are not in contact with the primitive endoderm derived basal lamina. These cells die by apoptosis giving rise to the proamniotic cavity, a process termed cavitation (7). This developmental process is recapitulated in embryoid bodies (EBs) generated from in vitro differentiating ES cells. ES cellderived EBs have been used to determine key regulatory factors of primitive germ layer formation and cavitation, and are a bona fide, in vitro model for early embryo morphogenesis (8 -10). A key experiment to determine the significance of ceramide for cavitation and primitive ectoderm morphogenesis is depleting EBs of ceramide by disruption of ceramide biosynthesis. Ceramide biosynthesis is initiated and regulated by serine palmitoyltransferase (SPT), an enzyme consisting of the two subunits SPT-1 and SPT-2. Homozygous knock-out of SPT-1 or SPT-2 results in embryonic lethality at a stage of development well before E15 indicating the absolute requirement of ceramide biosynthesis for embryo development (...