Macrophages play a central role in innate immune responses, in disposal of cholesterol, and in tissue homeostasis and remodeling. To perform these vital functions macrophages display high endosomal/lysosomal activities. Recent studies have highlighted that acid sphingomyelinase (ASMase), which generates ceramide from sphingomyelin, is involved in modulation of membrane structures and signal transduction in addition to its metabolic role in the lysosome. In this review, we bring together studies on ASMase, its different forms and locations that are necessary for the macrophage to accomplish its diverse functions. We also address the importance of ASMase to several disease processes that are mediated by activated macrophages.