Aims: Altered sphingosine 1-phosphate (S1P) homeostasis and signaling is implicated in various inflammatory diseases including atherosclerosis. As S1P levels are tightly controlled by S1P lyase, we investigated the impact of hematopoietic S1P lyase (Sgpl1(-/-)) deficiency on leukocyte subsets relevant to atherosclerosis. Methods and Results: LDL receptor deficient mice that were transplanted with Sgpl1(-/-) bone marrow showed disrupted S1P gradients translating into lymphopenia and abrogated lymphocyte mitogenic and cytokine response as compared to controls. Remarkably however, Sgpl1(-/-) chimeras displayed mild monocytosis, due to impeded stromal retention and myelopoiesis, and plasma cytokine and macrophage expression patterns, that were largely compatible with classical macrophage activation. Collectively these two phenotypic features of Sgpl1 deficiency culminated in diminished atherogenic response. Conclusions: Here we not only firmly establish the critical role of hematopoietic S1P lyase in controlling S1P levels and T cell trafficking in blood and lymphoid tissue, but also identify leukocyte Sgpl1 as critical factor in monocyte macrophage differentiation and function. Its, partly counterbalancing, pro-and anti-inflammatory activity spectrum imply that intervention in S1P lyase function in inflammatory disorders such as atherosclerosis should be considered with caution.