S1P lyase (SPL) catalyzes the irreversible degradation of sphingosine-1-phosphate (S1P), a bioactive lipid whose signaling activities regulate muscle differentiation, homeostasis, and muscle stem cell activation. By regulating S1P levels, SPL also controls muscle stem cell recruitment and muscle regeneration, representing a potential therapeutic target for muscular dystrophy. We found that SPL is induced during myoblast differentiation. Mouse myoblast cells lacking SPL accumulated intracellular and extracellular S1P and failed to form myotubes under conditions that normally stimulate muscle differentiation. We also showed that the S1P/SPL/S1P-receptor axis regulates the expression of a number of miRNAs associated with myogenesis, thereby contributing to muscle cell differentiation.