Invasiveness is one of the key features of aggressive prostate cancer; however, our understanding of the precise mechanisms effecting invasion remains limited. The ceramide hydrolyzing enzyme acid ceramidase (AC), overexpressed in most prostate tumors, causes an aggressive and invasive phenotype through downstream effectors that have not yet been well characterized. Here, we demonstrate that AC, through generation of sphingosine-1-phosphate (S1P), promotes Ets1 nuclear expression and binding to the promoter region of matrix-degrading protease cathepsin B. Through confocal microscopy and flow cytometry, we found that AC overexpression promotes pericellular localization of cathepsin B and its translocation to the outer leaflet of the cell membrane. AC overexpressing cells have an increased abundance of cathepsin B-enriched invasive structures and enhanced ability to invade through a collagen matrix, but not in the presence of an inhibitor of cathepsin B. In human prostate tissues, AC and cathepsin B overexpression were strongly associated and may relate to poor outcome. These results demonstrate a novel pathway by which AC, through S1P, promotes an invasive phenotype in prostate cancer by causing overexpression and secretion of cathepsin B through activation and nuclear expression of Ets1. As prostate cancer prognosis is dramatically worse when invasion has occurred, this study provides critical insight into the progression toward lethal prostate cancer.