Ceramide and diacylglycerol (DAG) are bioactive lipids and mediate many cellular signaling pathways. Sphingomyelin synthase (SMS) is the single metabolic link between the two, while SMS2 is the only SMS form located at the plasma membrane. SMS2 functions were investigated in HepG2 cell lines stably expressing SMS2. SMS2 overexpression did not alter sphingomyelin (SM), phosphatidylcholine (PC), or ceramide levels. DAG content increased by approx. 40% and led to downregulation of DAG-dependent protein kinase C (PKC). SMS2 overexpression also induced senescence, characterized by positivity for β-galactosidase activity and heterochromatin foci. HepG2-SMS2 cells exhibited protruded mitochondria and suppressed mitochondrial respiration rates. ATP production and the abundance of Complex V were substantially lower in HepG2-SMS2 cells as compared to controls. SMS2 overexpression was associated with inflammasome activation based on increases in IL-1β and nlpr3 mRNA levels. HepG2-SMS2 cells exhibited lipid droplet accumulation, constitutive activation of AMPK based on elevated Thr phosphorylation, increased AMPK abundance, and insensitivity to insulin suppression of AMPK. Thus, our results show that SMS2 regulates DAG homeostasis and signaling in hepatocytes and also provide proof of principle for the concept that offset in bioactive lipids' production at the plasma membrane can drive the senescence program in association with steatosis and, seemingly, by cell-autonomous mechanisms.