Ceramide and its derivative sphingosine-1-phosphate (S1P) are important signaling sphingolipids for neural stem cell apoptosis and differentiation. Most recently, our group has shown that novel ceramide analogs can be used to eliminate teratoma (stem cell tumor)-forming cells from a neural stem cell graft. In new studies, we found that S1P promotes survival of specific neural precursor cells that undergo differentiation to cells expressing oligodendroglial markers. Our studies suggest that a combination of novel ceramide and S1P analogs eliminates tumor-forming stem cells and at the same time, triggers oligodendroglial differentiation. This review discusses recent studies on the function of ceramide and S1P for the regulation of apoptosis, differentiation, and polarity in stem cells. We will also discuss results from ongoing studies in our laboratory on the use of sphingolipids in stem cell therapy.