Summary Saccharomyces cerevisiae cells lacking Isc1p, an orthologue of mammalian neutral sphingomyelinase 2, display a shortened lifespan and an increased sensitivity to oxidative stress. A lipidomic analysis revealed specific changes in sphingolipids that accompanied the premature ageing of Isc1p‐deficient cells under severe calorie restriction conditions, including a decrease of dihydrosphingosine levels and an increase of dihydro‐C26‐ceramide and phyto‐C26‐ceramide levels, the latter raising the possibility of activation of ceramide‐dependent protein phosphatases. Consequently, deletion of the SIT4 gene, which encodes for the catalytic subunit of type 2A ceramide‐activated protein phosphatase in yeast, abolished the premature ageing and hydrogen peroxide sensitivity of isc1Δ cells. SIT4 deletion also abolished the respiratory defects and catalase A deficiency exhibited by isc1Δ mutants. These results are consistent with catabolic derepression associated with the loss of Sit4p. The overall results show that Isc1p is an upstream regulator of Sit4p and implicate Sit4p activation in mitochondrial dysfunction leading to the shortened chronological lifespan and oxidative stress sensitivity of isc1Δ mutants.