Infantile globoid cell leukodystrophy (GLD, Krabbe disease) is a fatal demyelinating disorder caused by a deficiency in the lysosomal enzyme galactosylceramidase (GALC). GALC deficiency leads to the accumulation of the cytotoxic glycolipid, galactosylsphingosine (psychosine). Complementary evidence suggested that psychosine is synthesized via an anabolic pathway. Here, we show instead that psychosine is generated catabolically through the deacylation of galactosylceramide by acid ceramidase (ACDase). This reaction uncouples GALC deficiency from psychosine accumulation, allowing us to test the long-standing “psychosine hypothesis.” We demonstrate that genetic loss of ACDase activity (Farber disease) in the GALC-deficient mouse model of human GLD (twitcher) eliminates psychosine accumulation and cures GLD. These data suggest that ACDase could be a target for substrate reduction therapy (SRT) in Krabbe patients. We show that pharmacological inhibition of ACDase activity with carmofur significantly decreases psychosine accumulation in cells from a Krabbe patient and prolongs the life span of the twitcher (Twi) mouse. Previous SRT experiments in the Twi mouse utilized L-cycloserine, which inhibits an enzyme several steps upstream of psychosine synthesis, thus altering the balance of other important lipids. Drugs that directly inhibit ACDase may have a more acceptable safety profile due to their mechanistic proximity to psychosine biogenesis. In total, these data clarify our understanding of psychosine synthesis, confirm the long-held psychosine hypothesis, and provide the impetus to discover safe and effective inhibitors of ACDase to treat Krabbe disease. © 2019 National Academy of Sciences. All rights reserved.