Sphingosine 1-phosphate (S1P), a multifunctional lipid mediator, regulates lymphocyte trafficking, vascular permeability, and angiogenesis by activation of the S1P1 receptor. This receptor is activated by FTY720-P, a phosphorylated derivative of the immunosuppressant and vasoactive compound FTY720. However, in contrast to the natural ligand S1P, FTY720-P appears to act as a functional antagonist, even though the mechanisms involved are poorly understood. In this study, we investigated the fate of endogenously expressed S1P1 receptor in agonist-activated human umbilical vein endothelial cells and human embryonic kidney 293 cells expressing green fluorescent protein-tagged S1P1. We show that FTY720-P is more potent than S1P at inducing receptor degradation. Pretreatment with an antagonist of S1P1, VPC 44116, prevented receptor internalization and degradation. FTY720-P did not induce degradation of internalization-deficient S1P1 receptor mutants. Further, small interfering RNA-mediated down-regulation of G protein-coupled receptor kinase-2 and beta-arrestins abolished FTY720-P-induced S1P1 receptor degradation. These data suggest that agonist-induced phosphorylation of S1P1 and subsequent endocytosis are required for FTY720-P-induced degradation of the receptor. S1P1 degradation is blocked by MG132, a proteasomal inhibitor. Indeed, FTY720-P strongly induced polyubiquitinylation of S1P1 receptor, whereas S1P at concentrations that induced complete internalization was not as efficient, suggesting that receptor internalization is required but not sufficient for ubiquitinylation and degradation. We propose that the ability of FTY720-P to target the S1P1 receptor to the ubiquitinylation and proteasomal degradation pathway may at least in part underlie its immunosuppressive and anti-angiogenic properties.