This study utilized fluorescent analogs to characterize the intracellular transport and metabolism of dihydroceramide (DH-Cer), an intermediate in de novo sphingolipid biosynthesis. When 6-[N-(7-nitro-2,1,3-benzoxadiazol-4-yl)amino]hexanoyl-DH-Cer (C6-NBD-DH-Cer) was incubated with HT29, NRK, BHK, or HL-60 cells, it was efficiently converted to dihydrosphingomyelin and dihydroglucosylceramide, and a number of other sphingolipids, with the nature of the products depending on the cell line. In addition, complex sphingolipids were formed that contained a desaturated (sphingosine) backbone, indicating that DH-Cer (and/or its metabolites) were substrates for the desaturase(s) that introduce the 4,5-trans double bond. Based on the kinetics and inhibitor studies, double bond addition did not appear to occur with the complex sphingolipids directly, but rather, during turnover and resynthesis. The conversion of C6-NBD-DH-Cer to more complex sphingolipids was highly stereoselective for the natural D,erythro isomer of C6-NBD-DH-Cer. Interestingly, the stereochemistry of the sphingoid base backbone also affected the localization of fluorescent sphingolipids: the D,erythro species appeared in the Golgi apparatus, whereas other stereo-isomers accumulated in the endoplasmic reticulum. In addition to C6-NBD-Cer and C6-NBD-DH-Cer, C6-NBD-4-D-hydroxy-DH-Cer gave rise to formation of complex sphingolipids and localized at the Golgi apparatus. These studies indicate that dihydroceramide is used as the initial backbone of complex (glyco)sphingolipids, perhaps to avoid build up of ceramide as an intermediate since this is such a potent bioactive compound. The stereoselectivity in transport and metabolism suggests that trafficking of ceramide is protein-directed rather than simply a consequence of vesicular membrane flow.