FTY720 (fingolimod) is a first-in-class sphingosine 1-phosphate (S1P) receptor modulator that was highly effective in Phase II clinical trials for Multiple Sclerosis (MS). FTY720 is phosphorylated in vivo by sphingosine kinase-2 to form the active moiety FTY720-phosphate that binds to four of the five G protein-coupled S1P receptor subtypes. Studies using conditional S1P1 receptor-deficient and sphingosine kinase-deficient mice showed that the egress of lymphocytes from lymph nodes requires signalling of lymphocytic S1P1 receptors by the endogenous ligand S1P. The S1P mimetic FTY720-phosphate causes internalization and degradation of cell membrane-expressed S1P1, thereby antagonizing S1P action at the receptor. In models of human MS and demyelinating polyneuropathies, functional antagonism of lymphocytic S1P1 slows S1P-driven egress of lymphocytes from lymph nodes, thereby reducing the numbers of autoaggressive TH17 cells that recirculate via lymph and blood to the central nervous system and the sciatic/ischiatic nerves. Based on its lipophilic nature, FTY720 crosses the blood-brain barrier, and ongoing experiments suggest that the drug also down-modulates S1P1 in neural cells/astrocytes to reduce astrogliosis, a phenomenon associated with neurodegeneration in MS. This may help restore gap-junctional communication of astrocytes with neurons and cells of the blood-brain barrier. Additional effects may result from (down-) modulation of S1P3 in astrocytes and of S1P1 and S1P5 in oligodendrocytes. In conclusion, FTY720 may act through immune-based and central mechanisms to reduce inflammation and support structural restoration of the central nervous system parenchyma. Beyond the autoimmune indications, very recent studies suggest that short-term, low-dose administration of FTY720 could help treat chronic (viral) infections. Differential effects of the drug on the trafficking of naïve, central memory and effector memory T cell subsets are discussed.