Arterial medial calcification (AMC) involves an increased small extracellular vesicle (sEV) secretion and apatite calcium precipitation in the arterial wall. The mechanisms mediating AMC remain poorly understood. In the present study, smooth muscle-specific acid ceramidase (Ac) gene knockout mice (Asah1fl/fl/SMCre) were used to demonstrate the role of lysosomal ceramide signaling pathway in AMC. Asah1fl/fl/SMCre mice were found to have more severe AMC in both aorta and coronary arteries compared to their littermates (Asah1fl/fl/SMwt and WT/WT mice) after receiving a high dose vitamin D. These mice also had pronounced upregulation of osteopontin and RUNX2 (osteogenic markers), CD63, AnX2 (sEV markers) and ALP expression (mineralization marker) in the arterial media. In cultured coronary arterial smooth muscle cells (CASMCs) from Asah1fl/fl/SMCre mice, high dose of Pi led to a significantly increased calcium deposition, phenotypic change and sEV secretion compared to WT CASMCs, which was associated with reduced lysosome-multivesicular body (MVB) interaction. Also, GW4869, sEV release inhibitor decreased sEV secretion and calcification in these cells. Lysosomal transient receptor potential mucolipin 1 (TRPML1) channels regulating lysosome interaction with MVBs were found remarkably inhibited in Asah1fl/fl/SMCre CASMCs as shown by GCaMP3 Ca2+ imaging and Port-a-Patch patch clamping of lysosomes. Lysosomal Ac in SMCs controls sEV release by regulating lysosomal TRPML1 channel activity and lysosome-MVB interaction, which importantly contributes to phenotypic transition and AMC.