Hepatocellular carcinoma (HCC) is the most common type of liver cancer. It has a poor prognosis because it is often diagnosed at the advanced stage when treatments are limited. In addition, HCC pathogenesis is not fully understood, and this has affected early diagnosis and treatment of this disease. Human alkaline ceramidase 2 (ACER2), a key enzyme that regulates hydrolysis of cellular ceramides, affects cancer cell survival, however its role in HCC has not been well characterized. Our results showed that ACER2 is overexpressed in HCC tissues and cell lines. In addition, high ACER2 protein expression was associated with tumor growth; ACER2 knockdown resulted in decreased cell growth and migration. Sphingomyelin phosphodiesterase acid‐like 3B (SMPDL3B) promoted HCC cell growth, invasion, and migration; SMPDL3B knockdown had a significant inhibitory effect on HCC tumor growth in vivo. Moreover, ACER2 positively regulated the protein level of SMPDL3B. Of note, ACER2/SMPDL3B promoted ceramide hydrolysis and S1P production. This axis induced HCC survival and could be blocked by inhibition of S1P formation. In conclusion, ACER2 promoted HCC cell survival and migration, possibly via SMPDL3B. Thus, inhibition of ACER2/SMPDL3B may be a novel therapeutic target for HCC treatment. ACER2 induced SMPDL3B resulting in S1P formation and ceramide hydrolysis, which promoted HCC cells growth, invasion and migration.