Mammalian cells proteolytically release (shed) the extracellular domains of many cell-surface proteins. Modification of the cell surface in this way can alter the cell's responsiveness to its environment and release potent soluble regulatory factors. The release of soluble tumour-necrosis factor-alpha (TNF-alpha) from its membrane-bound precursor is one of the most intensively studied shedding events because this inflammatory cytokine is so physiologically important. The inhibition of TNF-alpha release (and many other shedding phenomena) by hydroxamic acid-based inhibitors indicates that one or more metalloproteinases is involved. We have now purified and cloned a metalloproteinase that specifically cleaves precursor TNF-alpha. Inactivation of the gene in mouse cells caused a marked decrease in soluble TNF-alpha production. This enzyme (called the TNF-alpha-converting enzyme, or TACE) is a new member of the family of mammalian adamalysins (or ADAMs), for which no physiological catalytic function has previously been identified. Our results should facilitate the development of therapeutically useful inhibitors of TNF-alpha release, and they indicate that an important function of adamalysins may be to shed cell-surface proteins.