Neointimal hyperplasia at the site of surgical intervention is a common and deleterious complication of surgery for cardiovascular diseases. We hypothesized that direct delivery of a cell-permeable growth-arresting lipid via the balloon tip of an embolectomy catheter would limit neointimal hyperplasia after stretch injury. We have previously demonstrated that sphingolipid-derived ceramide arrested the growth of smooth muscle cell pericytes in vitro. Here, we show that ceramide-coated balloon catheters significantly reduced neointimal hyperplasia induced by balloon angioplasty in rabbit carotid arteries in vivo. This ceramide treatment decreased the number of vascular smooth muscle cells entering the cell cycle without inducing apoptosis. In situ autoradiographic studies demonstrated that inflating the balloon catheter forced cell-permeable ceramide into the intimal and medial layers of the artery. Intercalation of ceramide into vascular smooth muscle cells correlated with rapid inhibition of trauma-associated phosphorylation of extracellular signal-regulated kinase and protein kinase B. These studies demonstrate the utility of cell-permeable ceramide as a novel therapy for reducing neointimal hyperplasia after balloon angioplasty.