Acid sphingomyelinase deficiency (ASMD) is a lysosomal storage disorder caused by mutations in the SMPD1 gene encoding for the acid sphingomyelinase (ASM). While intravenous infusion of recombinant ASM is an effective treatment for the peripheral disease, the neurological complications of ASMD remain unaddressed. It has been shown that aberrantly high level of total brain sphingomyelin (SM) is a key pathological event leading to neurodegeneration. Using mice lacking ASM (ASMko), which mimic the disease, we here demonstrate that among the SM species, SM16:0 shows the highest accumulation and toxicity in ASMko neurons. By targeting lysosomes, SM16:0 causes permeabilization and exocytosis of these organelles and induces oxidative stress and cell death. We also show that genetic silencing of Ceramide Synthase 5, which is involved in SM16:0 synthesis and overexpressed in the ASMko brain, prevents disease phenotypes in ASMko cultured neurons and mice. The levels of SM16:0 in plasma also show a strong correlation with those in brain that is higher than in liver, even at early stages of the disease. These results identify SM16:0 both as a novel therapeutic target and potential biomarker of brain pathology in ASMD.