Sphingolipids are important biological mediators both in health and disease. We investigated the vascular effects of enhanced sphingomyelinase (SMase) activity in a mouse model of type 2 diabetes mellitus (T2DM) to gain an understanding of the signaling pathways involved. Myography was used to measure changes in the tone of the thoracic aorta after administration of 0.2 U/mL neutral SMase in the presence or absence of the thromboxane prostanoid (TP) receptor antagonist SQ 29,548 and the nitric oxide synthase (NOS) inhibitor L-NAME. In precontracted aortic segments of non-diabetic mice, SMase induced transient contraction and subsequent weak relaxation, whereas vessels of diabetic (Leprdb/Leprdb, referred to as db/db) mice showed marked relaxation. In the presence of the TP receptor antagonist, SMase induced enhanced relaxation in both groups, which was 3-fold stronger in the vessels of db/db mice as compared to controls and could not be abolished by ceramidase or sphingosine-kinase inhibitors. Co-administration of the NOS inhibitor L-NAME abolished vasorelaxation in both groups. Our results indicate dual vasoactive effects of SMase: TP-mediated vasoconstriction and NO-mediated vasorelaxation. Surprisingly, in spite of the general endothelial dysfunction in T2DM, the endothelial NOS-mediated vasorelaxant effect of SMase was markedly enhanced.