Membrane proteins are functionally regulated by the composition of the surrounding lipid bilayer. The late endosomal compartment is a central site for the generation of ceramide, a bioactive sphingolipid, which regulates responses to cell stress. The molecular interactions between ceramide and late endosomal transmembrane proteins are unknown. Here, we uncover in atomistic detail the ceramide interaction of Lysosome Associated Protein Transmembrane 4B (LAPTM4B), implicated in ceramide-dependent cell death and autophagy, and its functional relevance in lysosomal nutrient signaling. The ceramide-mediated regulation of LAPTM4B depends on a sphingolipid interaction motif and an adjacent aspartate residue in the protein's third transmembrane (TM3) helix. The interaction motif provides the preferred contact points for ceramide while the neighboring membrane-embedded acidic residue confers flexibility that is subject to ceramide-induced conformational changes, reducing TM3 bending. This facilitates the interaction between LAPTM4B and the amino acid transporter heavy chain 4F2hc, thereby controlling mTORC signaling. These findings provide mechanistic insights into how transmembrane proteins sense and respond to ceramide.