Sphingolipids are an important part of the plasma membrane and implicated in a multitude of cellular processes. However, little is known about the role of sphingolipids in an epithelial context and their potential influence on the activity of signaling pathways. To shed light on these aspects we analyzed the consequences of changing ceramide levels in vivo in the Drosophila wing disc: an epithelial tissue in which the most fundamental signaling pathways, including the Wnt/Wg signaling pathway, are well characterized. We found that downregulation of Drosophila's only ceramide synthase gene schlank led to defects in the endosomal trafficking of proteins. One of the affected proteins is the Wnt ligand Wingless (Wg) that accumulated. Unexpectedly, although Wg protein levels were raised, signaling activity of the Wg pathway was impaired. Recent work has spotlighted the central role of the endocytic trafficking in the transduction of the Wnt signal. Our results underscore this and support the view that sphingolipid levels are crucial in orchestrating epithelial endocytic trafficking in vivo. They further demonstrate that ceramide/sphingolipid levels can affect Wnt signaling.