The overall goal of the present study was to evaluate the chemotherapeutic and cancer-protective properties of D-erythro-sphingosine (sphingosine) and C2-ceramide using a human breast epithelial cell (HBEC) culture system, which represents multiple-stages of breast carcinogenesis. The HBEC model includes Type I HBECs (normal stem), Type II HBECs (normal differentiated) and transformed cells (immortal/non-tumorigenic cells and tumorigenic cells, which are transformed from the same parental normal stem cells). The results of the present study indicate that sphingosine preferentially inhibits proliferation and causes death of normal stem cells (Type I), tumorigenic cells, and MCF7 breast cancer cells, but not normal differentiated cells (Type II). In contrast to the selective anti-proliferative effects of sphingosine, C2-ceramide inhibits proliferation of normal differentiated cells as well as normal stem cells, tumorigenic cells, and MCF7 cancer cells with similar potency. Both sphingosine and C2-ceramide induce apoptosis in tumorigenic cells. Among the sphingosine stereoisomers (D-erythro, D-threo, L-erythro, and L-threo) and sphinganine that were tested, L-erythro-sphingosine most potently inhibits proliferation of tumorigenic cells. The inhibition of breast tumorigenic/cancer cell proliferation by sphingosine was accompanied by inhibition of telomerase activity. Sphingosine at non-cytotoxic concentrations, but not C2-ceramide, induces differentiation of normal stem cells (Type I), thereby reducing the number of stem cells that are more susceptible to neoplastic transformation. To the best of our knowledge, the present study demonstrates one of the first results that sphingosine can be a potential chemotherapeutic and cancer-protective agent, whereas C2-ceramide is not an ideal chemotherapeutic and cancer-protective agent due to its anti-proliferative effects on Type II HBECs and its inability to induce the differentiation of Type I to Type II HBECs.