Sphinganine-1-phosphate lyase (Dpl1p) is a highly conserved enzyme of sphingolipid metabolism that catalyzes the irreversible degradation of sphingoid base phosphates, which are potent signaling molecules. Sphingoid base phosphates play a vital role in cell survival, proliferation, migration, heat stress, and cell wall integrity pathways. Little is known about the structure and regulation of Dpl1p. In this study, we have undertaken a combined computational modeling and mutagenesis approach for structure-function analysis of Dpl1p to discover possible modes of regulation. Our results identify important residues for catalysis in Dpl1p and confirm it as an integral endoplasmic reticulum-resident protein. Results further indicate that Dpl1p is most likely not regulated spatially. Importantly, we demonstrate that Dpl1p exists as an oligomer and that polar residues in its transmembrane domain are required for its full function in vivo but not for its localization or for its catalytic activity in vitro.