Sphingosine 1-phosphate (S1P) is a potent bioactive sphingolipid that plays essential roles in regulating various immune responses, including lymphocyte trafficking, immune cell differentiation, and immunosurveillance. Different immune responses to S1P arise from the diverse Sphingosine 1-phosphate receptors (S1PRs) expressed on the cell surface, shaping unique, context-dependent responses to S1P. Beyond surface receptor engagement, intracellular S1P signaling is also being recognized as a crucial modulator of immune cell responses. Furthermore, the multifaceted S1P signaling axis has emerged as a key regulator of immune responses within the tumor microenvironment (TME), influencing both innate and adaptive immune cell behavior to facilitate tumor progression. A deeper mechanistic understanding of S1P signaling and its impact on immune cell fate is essential for developing novel therapeutic strategies to enhance anti-tumor responses. This review summarizes our current knowledge of how S1P influences immune cell function, with a specific focus on S1PR-dependent and S1PR-independent cellular signaling pathways. We also examine the alterations in immune cell responses that occur within the TME and current therapeutic strategies targeting S1P signaling.