Sphingolipids are potent lipid second messengers that regulate cell differentiation, migration, survival, and secretion, and alterations in sphingolipid signaling have been implicated in a variety of diseases. However, how sphingolipid levels are regulated, particularly in the nervous system, remains poorly understood. Here, we show that the generation of sphingosine-1-phosphate by sphingosine kinase (SphK) promotes neurotransmitter release. Electrophysiological, imaging, and behavioral analyses of Caenorhabditis elegans mutants lacking sphingosine kinase sphk-1 indicate that neuronal development is normal, but there is a significant defect in neurotransmitter release from neuromuscular junctions. SPHK-1 localizes to discrete, nonvesicular regions within presynaptic terminals, and this localization is critical for synaptic function. Muscarinic agonists cause a rapid increase in presynaptic SPHK-1 abundance, whereas reduction of endogenous acetylcholine production results in a rapid decrease in presynaptic SPHK-1 abundance. Muscarinic regulation of presynaptic SPHK-1 abundance is mediated by a conserved presynaptic signaling pathway composed of the muscarinic acetylcholine receptor GAR-3, the heterotrimeric G protein Gαq, and its effector, Trio RhoGEF. SPHK-1 activity is required for the effects of muscarinic signaling on synaptic transmission. This study shows that SPHK-1 promotes neurotransmitter release in vivo and identifies a novel muscarinic pathway that regulates SphK abundance at presynaptic terminals.