Using C6-NBD-glucosylceramide (GlcCer) as a substrate, we detected the activity of a conduritol B epoxide (CBE)-insensitive neutral glycosylceramidase in cytosolic fractions of zebrafish embryos, mouse and rat brains and human fibroblasts. The candidates for the enzyme were assigned to the Klotho (KL) whose family members share a -glucosidase-like domain but whose natural substrates unknown. Among this family, only the KL-related protein (KLrP) is capable of degrading C6-NBD-GlcCer when expressed in CHOP cells, in which Myc-tagged KLrP was exclusively distributed in the cytosol. In addition, knockdown of the endogenous KLrP by siRNA increased the cellular level of GlcCer. The purified recombinant KLrP hydrolyzed 4-methylumbelliferyl-glucose, C6-NBD-GlcCer, and authentic GlcCer at pH 6.0. The enzyme also hydrolyzed the corresponding galactosyl derivatives but each kcat/Km was much lower than that for glucosyl derivatives. The X-ray structure of KLrP at 1.6  resolution revealed that KLrP is a (/)8 TIM barrel, in which E165 and E373 at the carboxyl termini of -strands 4 and 7 could function as an acid/base catalyst and nucleophile, respectively. The distance between carboxyl oxygens of these two residues is 5.3  indicating the reaction proceeds with the anomeric carbon retained upon cleavage, rather than inverted. The substrate-binding cleft of the enzyme was occupied with palmitic acid and oleic acid when the recombinant protein was crystallized in a complex with glucose. GlcCer was found to well fit the cleft of the crystal structure of KLrP. Collectively, KLrP was identified as a cytosolic neutral glycosylceramidase which could be involved in a novel non-lysosomal catabolic pathway of GlcCer.