Sphingosine kinase 1 (SK1) is an important regulator of cellular signalling that has gained recent attention as a potential target for anti-cancer therapies. SK1 activity, subcellular localization and oncogenic function are regulated by phosphorylation and dephosphorylation at Ser225. ERK1/2 have been identified as the protein kinases responsible for phosphorylation and activation of SK1. Conversely, dephosphorylation and deactivation of SK1 occurs by protein phosphatase 2A (PP2A). Active PP2A, however, is a heterotrimer, composed of tightly associated catalytic and structural subunits that can interact with an array of regulatory subunits, which are critical for determining holoenzyme substrate specificity and subcellular localization. Thus, PP2A represents a large family of holoenzyme complexes with different activities and diverse substrate specificities. To date the regulatory subunit essential for targeting PP2A to SK1 has remained undefined. Here, we demonstrate a critical role for the B'α (B56α/PR61α/PPP2R5A) regulatory subunit of PP2A in SK1 dephosphorylation. B'α was found to interact with the c-terminus of SK1, and reduce SK1 phosphorylation when overexpressed, while having no effect on upstream ERK1/2 activation. siRNA-mediated knockdown of B'α increased SK1 phosphorylation, activity and membrane localization of endogenous SK1. Furthermore, overexpression of B'α blocked agonist-induced translocation of SK1 to the plasma membrane and abrogated SK1-induced neoplastic transformation of NIH3T3 fibroblasts. Thus, the PP2A-B'α holoenzyme appears to function as an important endogenous regulator of SK1.