The enzyme acid sphingomyelinase catalyzes the hydrolysis of sphingomyelin to ceramide. The importance of the enzyme for cell functions was first recognized in Niemann-Pick disease type A and B, the genetic disorders with a massive accumulation of sphingomyelin in many organs. Studies in the last years demonstrated that the enzyme also has an important role in cell signalling. Thus, the acid sphingomyelinase has a central function for the re-organization of molecules within the cell upon stimulation and thereby for the response of cells to stress and the induction of cell death but also proliferation and differentiation. Here, we discuss the current state of the art of the structure, regulation, and function of the acid sphingomyelinase.