Variants in multiple lysosomal enzymes increase Parkinson’s disease (PD) risk, including the genes encoding glucocerebrosidase (GCase), acid sphingomyelinase (ASMase) and galactosylceramidase. Each of these enzymes generates ceramide by hydrolysis of sphingolipids in lysosomes, but the role of this common pathway in PD pathogenesis has not yet been explored. Variations in GBA1, the gene encoding GCase, are the most common genetic risk factor for PD. The lysosomal enzyme cathepsin B has recently been implicated as an important genetic modifier of disease penetrance in individuals harboring GBA1 variants, suggesting a mechanistic link between these enzymes. Here, we found that ceramide activates cathepsin B, and identified a novel role for cathepsin B in mediating prosaposin cleavage to form saposin C, the lysosomal coactivator of GCase. Interestingly, this pathway was disrupted in Parkin-linked PD models, and upon treatment with inhibitor of ASMase which resulted in decreased ceramide production. Conversely, increasing ceramide production by inhibiting acid ceramidase activity was sufficient to upregulate cathepsin B- and saposin C-mediated activation of GCase. These results highlight a mechanistic link between ceramide and cathepsin B in regulating GCase activity and suggest that targeting lysosomal ceramide or cathepsin B represents an important therapeutic strategy for activating GCase in PD and related disorders.