Sphingolipids are a structurally diverse group of molecules based on long-chain sphingoid bases that are found in animal, fungal and plant cells. In contrast to the situation in animals and yeast, much less is known about the spectrum of sphingolipid species in plants and the roles they play in mediating cellular processes. Here, we report the cloning and characterization of a plant ceramidase from rice (Oryza sativa spp. Japonica cv. Nipponbare). Sequence analysis suggests that the rice ceramidase (OsCDase) is similar to mammalian neutral ceramidases. We demonstrate that OsCDase is a bona fide ceramidase by heterologous expression in the yeast double knockout mutant Δypc1Δydc1 that lacks the yeast ceramidases YPC1p and YDC1p. Biochemical characterization of OsCDase showed that it exhibited classical Michaelis–Menten kinetics, with optimum activity between pH 5.7 and 6.0. OsCDase activity was enhanced in the presence of Ca2+, Mg2+, Mn2+ and Zn2+, but inhibited in the presence of Fe2+. OsCDase appears to use ceramide instead of phytoceramide as a substrate. Subcellular localization showed that OsCDase is localized to the endoplasmic reticulum and Golgi, suggesting that these organelles are sites of ceramide metabolism in plants.