ATP hydrolysis has been regarded as a general requirement for internalization processes in mammalian cells. We found, however, that treatment of ATP-depleted macrophages and fibroblasts with exogenous sphingomyelinase (SMase) rapidly induces formation of numerous vesicles that pinch off from the plasma membrane; the process is complete within 10 min after adding SMase. By electron microscopy, the SMase-induced vesicles are approximately 400 nm in diameter and lack discernible coats. 15-30% of plasma membrane is internalized by SMase treatment, and there is no detectable enrichment of either clathrin or caveolin in these vesicles. When ATP is restored to the cells, the SMase-induced vesicles are able to deliver fluid-phase markers to late endosomes/lysosomes and return recycling receptors, such as transferrin receptors, back to the plasma membrane. We speculate that hydrolysis of sphingomyelin on the plasma membrane causes inward curvature and subsequent fusion to form sealed vesicles. Many cell types express a SMase that can be secreted or delivered to endosomes and lysosomes. The hydrolysis of sphingomyelin by these enzymes is activated by several signaling pathways, and this may lead to formation of vesicles by the process described here.