Long chain sphingoid bases (LCBs) and their phosphates (LCBPs) are not only important intermediates in ceramide biosynthesis but also signaling molecules in the yeast, Saccharomyces cerevisiae. Their cellular levels, which control multiple cellular events in response to external and intrinsic signals, are tightly regulated by coordinated action of metabolic enzymes such as LCB kinase and LCBP phosphatase. However, little is known about the mechanisms by which the two enzymes generate biosynthetic or signaling outputs. It has been shown that the LCBP phosphatase, Lcb3p, is required for efficient ceramide synthesis from exogenous LCB. Here we present direct evidence that the major LCB kinase, Lcb4p, but not the minor kinase, Lcb5p, regulates synthesis of ceramide from exogenously added LCB. Surprisingly, our biochemical evidence suggests that the LCBP used for ceramide synthesis must be generated on the membrane. Our data show that Lcb4p is tightly associated with membranes and is localized to the endoplasmic reticulum where it can work in concert with Lcb3p. These results raise the conceptually attractive possibility that membrane-associated and cytosolic Lcb4p play distinct roles to differentially generate biosynthetic and signaling pools of LCBP.