Adaptive immunity depends on T-cell exit from the thymus and T and B cells travelling between secondary lymphoid organs to survey for antigens. After activation in lymphoid organs, T cells must again return to circulation to reach sites of infection; however, the mechanisms regulating lymphoid organ exit are unknown. An immunosuppressant drug, FTY720, inhibits lymphocyte emigration from lymphoid organs, and phosphorylated FTY720 binds and activates four of the five known sphingosine-1-phosphate (S1P) receptors. However, the role of S1P receptors in normal immune cell trafficking is unclear. Here we show that in mice whose haematopoietic cells lack a single S1P receptor (S1P1; also known as Edg1) there are no T cells in the periphery because mature T cells are unable to exit the thymus. Although B cells are present in peripheral lymphoid organs, they are severely deficient in blood and lymph. Adoptive cell transfer experiments establish an intrinsic requirement for S1P1 in T and B cells for lymphoid organ egress. Furthermore, S1P1-dependent chemotactic responsiveness is strongly upregulated in T-cell development before exit from the thymus, whereas S1P1 is downregulated during peripheral lymphocyte activation, and this is associated with retention in lymphoid organs. We find that FTY720 treatment downregulates S1P1, creating a temporary pharmacological S1P1-null state in lymphocytes, providing an explanation for the mechanism of FTY720-induced lymphocyte sequestration. These findings establish that S1P1 is essential for lymphocyte recirculation and that it regulates egress from both thymus and peripheral lymphoid organs.