In the current study, we investigated the potential activity of AR-42, a novel histone deacetylase (HDAC) inhibitor, against colon cancer cells. Our in vitro results showed that AR-42 induced ceramide production, exerted potent anti-proliferative and pro-apoptotic activities in established (SW-620 and HCT-116 lines) and primary human colon cancer cells. Exogenously-added sphingosine 1-phosphate (S1P) suppressed AR-42-induced activity, yet a cell-permeable ceramide (C4) facilitated AR-42-induced cytotoxicity against colon cancer cells. In addition, AR-42-induced ceramide production and anti-colon cancer cell activity were inhibited by the ceramide synthase inhibitor fumonisin B1, but were exacerbated by PDMP, which is a ceramide glucosylation inhibitor. In vivo, oral administration of a single dose of AR-42 dramatically inhibited SW-620 xenograft growth in severe combined immunodeficient (SCID) mice, without inducing overt toxicities. Together, these results show that AR-42 dramatically inhibits colon cancer cell proliferation in vitro and in vivo, and ceramide production might be the key mechanism responsible for its actions.