Signaling by sphingosine 1-phosphate (S1P) through its receptor S1P(1) has recently been shown to promote thymocyte egress. In the periphery, S1P(1) is expressed on naive T cells but lost upon T cell activation. To determine the significance of S1P(1) down-regulation and function of S1P(1) in peripheral T cells, we developed transgenic mice that constitutively express S1P(1) in T cells. Mature T cells from these mice exhibited enhanced chemotactic response toward S1P, and preferentially distributed to the blood rather than secondary lymphoid organs. S1P(1)-transgenic mice showed significant delay in the onset of experimental autoimmune encephalomyelitis, and had defective contact hypersensitivity reaction and local Ag-induced responses. These impairments were associated with reduced numbers of Ag-activated T cells in the draining lymph nodes. Our studies demonstrate that S1P(1) signaling affects systemic trafficking of peripheral T cells and immune responses and highlight that levels of S1P(1) expression represent an important mechanism of immune regulation.