Sphingosine 1-phosphate (S1P) is a bioactive sphingolipid metabolite involved in many critical cellular processes including proliferation, survival, and migration, as well as angiogenesis and allergic responses. S1P levels inside cells are tightly regulated by the balance between its synthesis by sphingosine kinases and degradation. S1P is interconvertible with ceramide, which is a critical mediator of apoptosis. It has been postulated that the ratio between S1P and ceramide determines cell fate. Activation of sphingosine kinase by a variety of agonists increases intracellular S1P, which in turn can function intracellularly as a second messenger or be secreted out of the cell and act extracellularly by binding to and signaling through S1P receptors in autocrine and/or paracrine manners. Recent studies suggest that this “inside-out” signaling by S1P may play a role in many human diseases, including cancer, atherosclerosis, inflammation, and autoimmune disorders such as multiple sclerosis. In this review we summarize metabolism of S1P, mechanisms of sphingosine kinase activation, and S1P receptors and their downstream signaling pathways and examine relationships to multiple disease processes. In particular, we describe recent preclinical and clinical trials of therapies targeting S1P signaling, including 2-amino-2-propane-1,3-diol hydrochloride (FTY720, fingolimod), S1P receptor agonists, sphingosine kinase inhibitors, and anti-S1P monoclonal antibody.