The enzymatic generation of ceramide has significant effects on the biophysical properties of lipid bilayers and can lead to the extensive reorganization of cell membranes. We have synthesized and characterized a headgroup-labeled fluorescent lipid probe (NBD-ceramide, NBD-Cer) and demonstrated that it can be used for polarized total internal reflection fluorescence microscopy experiments to probe changes in membrane order that result from ceramide incorporation. NBD-Cer measures significantly higher order parameters for the liquid-ordered (Lₒ) domains (〈P₂〉 = 0.40 ± 0.03) than for the liquid-disordered phase (Ld, fluid, 〈P₂〉 = 0.22 ± 0.02) of phase-separated bilayers prepared from egg sphingomyelin, dioleolyphosphatidylcholine, and cholesterol mixtures. The probe also responds to changes in packing induced by the direct incorporation of ceramide or the variation in the ionic strength of the aqueous medium. Order parameter maps obtained after enzyme treatment of bilayers with coexisting Lₒ and Ld phases show two distinct types of behavior. In regions of high enzyme activity, the initial Lₒ/Ld domains are replaced by large, dark features that have high membrane order corroborating previous hypotheses that these are ceramide-enriched regions of the membrane. In areas of low enzyme activity, the size and shape of the Lo domains are conserved, but there is an increase in the order parameter for the initial Ld phase (〈P₂〉 = 0.30 ± 0.01). This is attributed to the incorporation of ceramide in the Lo domains with the concomitant expulsion of cholesterol into the surrounding fluid phase, increasing its order parameter.