The bioactive lipid sphingosine 1-phosphate (S1P) is a degradation product of sphingolipids that are particularly abundant in neurons. We have shown previously that neuronal S1P accumulation is toxic leading to ER-stress and an increase in intracellular calcium. To clarify the neuronal function of S1P, we generated brain-specific knockout mouse models in which S1P-lyase (SPL), the enzyme responsible for irreversible S1P cleavage was inactivated. Constitutive ablation of SPL in the brain (SPL^fl/fl/Nes) but not postnatal neuronal forebrain-restricted SPL deletion (SPL^fl/fl/CaMK) caused marked accumulation of S1P. Hence, altered presynaptic architecture including a significant decrease in number and density of synaptic vesicles, decreased expression of several presynaptic proteins, and impaired synaptic short term plasticity were observed in hippocampal neurons from SPL^fl/fl/Nes mice. Accordingly, these mice displayed cognitive deficits. At the molecular level, an activation of the ubiquitin-proteasome system (UPS) was detected which resulted in a decreased expression of the deubiquitinating enzyme USP14 and several presynaptic proteins. Upon inhibition of proteasomal activity, USP14 levels, expression of presynaptic proteins and synaptic function were restored. These findings identify S1P metabolism as a novel player in modulating synaptic architecture and plasticity.