Lipids are essential structural and functional components of the central nervous system (CNS). Sphingolipids are ubiquitous membrane components which were discovered in the brain in the late 19^th century. In mammals, the brain contains the highest concentration of sphingolipids in the body. Sphingosine 1-phosphate (S1P) derived from membrane sphingolipids evokes multiple cellular responses which, depending on its concentration and localization, make S1P a double-edged sword in the brain. In the present review we highlight the role of S1P in brain development and focus on the often contrasting findings regarding its contributions to the initiation, progression and potential recovery of different brain pathologies, including neurodegeneration, multiple sclerosis (MS), brain cancers, and psychiatric illnesses. A detailed understanding of the critical implications of S1P in brain health and disease may open the door for new therapeutic options. Thus, targeting S1P-metabolizing enzymes and/or signaling pathways might help overcome, or at least ameliorate, several brain illnesses.