Sphingosine 1-phosphate (S1P), a bioactive lysophospholipid generated by sphingosine kinase 1 (SphK1), regulates lymphocyte egress into circulation via S1P receptor 1 (S1PR1) signaling, and it controls the differentiation of regulatory T cells (Tregs) and T helper-17 cells. However, the mechanisms by which receptor-independent SphK1-mediated intracellular S1P levels modulate T cell functionality remains unknown. We show here that SphK1-deficient T cells maintain central memory phenotype and exhibit higher mitochondrial respiration and reduced differentiation to Tregs. Mechanistically, we discovered a direct correlation between SphK1-generated S1P and lipid transcription factor PPARγ (peroxisome proliferator-activated receptor gamma) activity, which in turn regulates lipolysis in T cells. Genetic and pharmacologic inhibition of SphK1 improved metabolic fitness and anti-tumor activity of T cells against murine melanoma. Further, inhibition of SphK1 and PD1 together led to improved control of melanoma. Overall, these data highlight the clinical potential of limiting SphK1/S1P signaling for enhancing anti-tumor-adoptive T cell therapy.