Catalyzes the hydrolysis of sphingomyelin to form ceramide and phosphocholine. Ceramide mediates numerous cellular functions, such as apoptosis and growth arrest, and is capable of regulating these 2 cellular events independently. Also hydrolyzes sphingosylphosphocholine. Regulates the cell cycle by acting as a growth suppressor in confluent cells. Probably acts as a regulator of postnatal development and participates in bone and dentin mineralization (PubMed:15051724, PubMed:15764706, PubMed:15929065, PubMed:16025116). Binds to anionic phospholipids (APLs) such as phosphatidylserine (PS) and phosphatidic acid (PA) that modulate enzymatic activity and subcellular location (PubMed:21550973). May be involved in IL-1-beta-induced JNK activation in hepatocytes (By similarity). May act as a mediator in transcriptional regulation of NOS2/iNOS via the NF-kappa-B activation under inflammatory conditions (By similarity). a sphingomyelin + H2O = an N-acylsphing-4-enine + H(+) + phosphocholine H2O + N-(15Z-tetracosenoyl)sphing-4-enine-1-phosphocholine = H(+) + N-(15Z-tetracosenoyl)-sphing-4-enine + phosphocholine H2O + N-(tetracosanoyl)-sphing-4-enine-1-phosphocholine = H(+) + N-tetracosanoyl-sphing-4-enine + phosphocholine H2O + N-(hexadecanoyl)-sphing-4-enine-1-phosphocholine = H(+) + N-hexadecanoylsphing-4-enine + phosphocholine an N-(acyl)-sphingosylphosphocholine + H2O = an N-acyl-sphingoid base + H(+) + phosphocholine 1-hexadecanoyl-sn-glycero-3-phosphocholine + H2O = 1-hexadecanoyl-sn-glycerol + H(+) + phosphocholine 1-O-octadecyl-sn-glycero-3-phosphocholine + H2O = 1-O-octadecyl-sn-glycerol + H(+) + phosphocholine a sphingosylphosphocholine + H2O = a sphingoid base + H(+) + phosphocholine Inhibited by nSMase inhibitor GW4869. Binding of anionic phospholipids (APLs) such as phosphatidylserine (PS) and phosphatidic acid (PA) increases enzymatic activity (PubMed:21550973). Lipid metabolism; sphingolipid metabolism. May localize to detergent-resistant subdomains of Golgi membranes of hypothalamic neurosecretory neurons (PubMed:15764706). Predominantly expressed in brain (at protein level). Palmitoylated, palmitoylation-deficient proteins are targeted for lysosomal degradation. Defects in smpd3 are the cause of fragilitas ossium (fro) mutation characterized by severe osteogenesis and dentinogenesis imperfecta with no detectable collagen defect. Mice lacking Smpd2 and Smpd3 are completely devoid of neutral SMase activity but do not developed sphingomyelin storage abnormalities. Mice lacking Smpd3 develop a form of dwarfism and delayed puberty as part of a hypothalamus-induced combined pituitary hormone deficiency (CPHD). Growth retardation is probably due to delayed ossification of long bones. Belongs to the neutral sphingomyelinase family.