Extracellular calcium (Ca2+(o)) potently induces the growth arrest and differentiation of human epidermal keratinocytes (HEKs). We report that Ca2+(o) markedly upregulates the human alkaline ceramidase 1 (haCER1) in HEKs; and its upregulation mediates the Ca2+(o)-induced growth arrest and differentiation of HEKs. haCER1 is the human ortholog of mouse alkaline ceramidase 1 that we previously identified. haCER1 catalyzed the hydrolysis of very long-chain ceramides to generate sphingosine (SPH). This in vitro activity required Ca2+. Ectopic expression of haCER1 in HEKs decreased the levels of D-e-C(24:1)-ceramide and D-e-C(24:0)-ceramide but elevated the levels of both SPH and its phosphate (S1P), whereas RNA interference-mediated knockdown of haCER1 caused the opposite effects on the levels of these sphingolipids in HEKs. Similar to haCER1 overexpression, Ca2+(o) increased the levels of SPH and S1P, and this was attenuated by haCER1 knockdown. haCER1 knockdown also inhibited the Ca2+(o)-induced growth arrest of HEKs and the Ca2+(o)-induced expression of keratin 1 and involucrin in HEKs. In addition, the acid ceramidase (AC) was also upregulated by Ca2+(o); and its knockdown attenuated the Ca2+(o)-induced expression of keratin 1 and involucrin in HEKs. These results strongly suggest that upregulation of haCER1 and AC mediates the Ca2+(o)-induced growth arrest and differentiation of HEKs by generating SPH and S1P.