Asthma is characterized by airway inflammation, remodeling, and hyperresponsiveness to contractile stimuli that promote airway constriction and wheezing. Here we present evidence that sphingosine 1‐phosphate (SPP) is a potentially important inflammatory mediator implicated in the pathogenesis of airway inflammation and asthma. SPP levels were elevated in the airways of asthmatic (but not control) subjects following segmental antigen challenge, and this increase was correlated with a concomitant increase in airway inflammation. Because human airway smooth muscle (ASM) cells expressed EDG receptors for SPP (EDG‐1, ‐3, ‐5, and ‐6), we examined whether SPP may play a role in airway inflammation and remodeling, by affecting ASM cell growth, contraction, and cytokine secretion. SPP is mitogenic and augments EGF‐ and thrombin‐induced DNA proliferation by increasing G₁/S progression. SPP increased phosphoinositide turnover and intracellular calcium mobilization, the acute signaling events that affect ASM contraction. By modulating adenylate cyclase activity and cAMP accumulation, SPP had potent effects on cytokine secretion. Although SPP inhibited TNF‐α–induced RANTES release, it induced substantial IL‐6 secretion alone and augmented production of IL‐6 induced by TNF‐α. These studies are the first to associate SPP with airway inflammation and to identify SPP as an effective regulator of ASM growth, contraction and synthetic functions.