Endoplasmic reticulum (ER) stress and excessive nitric oxide production via the induction of inducible nitric oxide synthase (NOS2) have been implicated in the pathogenesis of ocular diseases characterized by retinal degeneration. Previous studies have revealed the sphingomyelinase/ceramide pathway in the regulation of NOS2 induction. Thus, the objective of this study was to determine the activity of the sphingomyelinase/ceramide pathway, assess nitric oxide production, and examine apoptosis in human retinal pigment epithelial (RPE) cells undergoing ER stress. Sphingomyelinase (SMase) activity; nuclear factor κB (NF-κB) activation; NOS2, nitrite/nitrate, and nitrotyrosine levels; and apoptosis were determined in cultured human RPE cell lines subjected to ER stress via exposure to tunicamycin. Induction of ER stress was confirmed by increased intracellular levels of ER stress markers including phosphorylated PKR-like ER kinase, C/EBP-homologous protein, and 78-kDa glucose-regulated protein. ER stress increased nuclear translocation of NF-κB, NOS2 expression, nitrite/nitrate levels, and nitrotyrosine formation and caused apoptosis in RPE cell lines. Inhibition of neutral SMase (N-SMase) activity via GW 4869 treatment caused a significant reduction in nuclear translocation of NF-κB, NOS2 expression, nitrite/nitrate levels, nitrotyrosine formation, and apoptosis in ER-stressed RPE cells. In conclusion, N-SMase inhibition reduced nitrative stress and apoptosis in RPE cells undergoing ER stress. Obtained data suggest that NOS2 can be regulated by N-SMase in RPE cells experiencing ER stress.