Epithelial-to-mesenchymal transition (EMT) is a dramatic change in cellular physiology during development and metastasis, which requires coordination between cell signaling, adhesion, and membrane protrusions. These processes all involve dynamic changes in the plasma membrane; yet, how membrane lipid content regulates membrane function during EMT remains incompletely understood. By screening for differential expression of lipid-modifying genes over the course of EMT in the avian neural crest, we have identified the ceramide-producing enzyme neutral sphingomyelinase 2 (nSMase2) as a critical regulator of a developmental EMT. nSMase2 expression begins at the onset of EMT, and in vivo knockdown experiments demonstrate that nSMase2 is necessary for neural crest migration. We find that nSMase2 promotes Wnt and BMP signaling and is required to activate the mesenchymal gene expression program. Mechanistically, we show that nSMase2-dependent ceramide production is necessary for and sufficient to up-regulate endocytosis and is required for Wnt co-receptor internalization. Finally, inhibition of endocytosis in the neural crest mimics the loss of migration and Wnt signaling observed following nSMase2 knockdown. Our results support a model in which nSMase2 is expressed at the onset of neural crest EMT to produce ceramide and facilitate receptor-mediated endocytosis of Wnt and BMP signaling complexes, thereby activating promigratory gene expression. These results highlight the critical role of plasma membrane lipid metabolism in regulating transcriptional changes during developmental EMT programs.