Sphingosine-1-phosphate (S1P) is a potent lipid signaling molecule that regulates pleiotropic biological functions including cell migration, survival, angiogenesis, immune cell trafficking, inflammation, and carcinogenesis. It acts as a ligand for a family of cell surface receptors. S1P concentrations are high in blood and lymph but low in tissues, especially the thymus and lymphoid organs. S1P chemotactic gradients are essential for lymphocyte egress and other aspects of physiological cell trafficking. S1P is irreversibly degraded by S1P lyase (SPL). SPL regulates lymphocyte trafficking, inflammation and other physiological and pathological processes. For example, SPL located in thymic dendritic cells acts as a metabolic gatekeeper that controls the normal egress of mature T lymphocytes from the thymus into the circulation, whereas SPL deficiency in gut epithelial cells promotes colitis and colitis-associated carcinogenesis (CAC). Recently, we identified a complex syndrome comprised of nephrosis, adrenal insufficiency, and immunological defects caused by inherited mutations in human SGPL1, the gene encoding SPL. In the present article, we review current evidence supporting the role of SPL in thymic egress, inflammation, and cancer. Lastly, we summarize recent progress in understanding other SPL functions, its role in inherited disease, and SPL targeting for therapeutic purposes.