The phospholipase neutral sphingomyelinase (N-SMase) has been recognized as a major mediator of processes such as inflammation, development and growth, differentiation and death of cells, as well as in diseases such as Alzheimer's, atherosclerosis, heart failure, ischemia/reperfusion damage, or combined pituitary hormone deficiency. Although activation of N-SMase by the proinflammatory cytokine TNF was described almost two decades ago, the underlying signaling pathway is unresolved. Here, we identify the Polycomb group protein EED (embryonic ectodermal development) as an interaction partner of nSMase2. In yeast, the N terminus of EED binds to the catalytic domain of nSMase2 as well as to RACK1, a protein that modulates the activation of nSMase2 by TNF in concert with the TNF receptor 1 (TNF-R1)-associated protein FAN. In mammalian cells, TNF causes endogenous EED to translocate from the nucleus and to colocalize and physically interact with both endogenous nSMase2 and RACK1. As a consequence, EED and nSMase2 are recruited to the TNF-R1.FAN.RACK1-complex in a timeframe concurrent with activation of nSMase2. After knockdown of EED by RNA interference, the TNF-dependent activation of nSMase2 is completely abrogated, identifying EED as a protein that both physically and functionally couples TNF-R1 to nSMase2, and which therefore represents the "missing link" that completes one of the last unresolved signaling pathways of TNF-R1.