The lipid second messenger sphingosine 1-phosphate (S1P) is a critical mediator of cellular proliferation and survival signals, and is essential for vasculogenesis and neurogenesis. S1P formation is catalysed by sphingosine kinases 1 and 2 (Sphk1 and Sphk2). We have found that the endogenous glycolipid sulfatide (3-O-sulfogalactosylceramide) binds to and inhibits the activity of Sphk2 and the closely related ceramide kinase (Cerk), but not Sphk1. Using sulfatide as a probe, we mapped the lipid binding domain to the N-terminus of Sphk2 (residues 1-175), a region of sequence that is absent in Sphk1, but aligns with a pleckstrin homology domain in Cerk. Accordingly, Sphk2 bound to phosphatidylinositol monophosphates but not to abundant cellular phospholipids. Deleting the N-terminal domain reduced Sphk2 membrane localisation in cells. We have therefore identified a lipid binding domain in Sphk2 that is important for the enzyme's sub-cellular localisation.