The IL-1β signaling cascade is initiated by the phosphorylation of IL-1β receptor-associated kinase-1 (IRAK-1), followed by its ubiquitination and degradation. This paper investigates the regulation of IRAK-1 degradation in primary hepatocytes and in HEK cells overexpressing the IL-1β receptor. We provide evidence that protein phosphatase 2A (PP2A) is a negative regulator of the phosphorylation, Lys(48)-linked ubiquitination, and degradation of IRAK-1. PP2A catalytic activity increased within 30 min of stimulation with IL-1β. siRNA against PP2A catalytic subunit (PP2Ac) or treatment with pharmacological inhibitor, okadaic acid, enhanced IRAK-1 Lys(48)-linked ubiquitination and degradation. Direct interaction between PP2Ac and IRAK-1 was observed, suggesting that IRAK-1 might be a PP2A substrate. The mechanisms of PP2A activation by IL-1β involved neutral sphingomyelinase-2 (NSMase-2) and an accumulation of ceramide. Overexpression of NSMase-2 delayed IRAK-1 degradation in a PP2A-dependent manner, whereas NSMase-2 silencing had the opposite effect. The addition of sphingomyelinase, ceramide, or a proteasome inhibitor all led to retention of IRAK-1 at the cell membrane and to increased JNK phosphorylation. This study suggests that NSMase-2- and PP2A-dependent regulation of IRAK-1 degradation is a novel mechanism to fine tune the magnitude of IL-1β response.