The extracellular domains of many proteins, including growth factors, cytokines, receptors, and adhesion molecules, are proteolytically released from cells, a process termed "shedding." Tumor necrosis factor-alpha converting enzyme (TACE/ADAM-17) is a metalloprotease-disintegrin that sheds tumor necrosis factor-alpha and other proteins. To study the regulation of TACE-mediated shedding, we examined the effects of stimulation of cells on TACE localization and expression. Immunofluorescence microscopy revealed a punctate distribution of TACE on the surface of untreated cells, and stimulation of monocytic cells with lipopolysaccharide did not affect TACE staining. Phorbol 12-myristate 13-acetate (PMA), a potent inducer of shedding, decreased cell-surface staining for TACE. Surface biotinylation experiments confirmed and extended this observation; PMA decreased the half-life of surface-biotinylated TACE without increasing the turnover of total cell-surface proteins. Soluble fragments of TACE were not detected in the medium of cells that had down-regulated TACE, and TACE was not down-regulated when endocytosis was inhibited. Antibody uptake experiments suggested that cell-surface TACE was internalized in response to PMA. Surprisingly, a metalloprotease inhibitor prevented the PMA-induced turnover of TACE. Thus, PMA activates shedding and causes the down-regulation of a major "sheddase," suggesting that induced shedding may be regulated by a mechanism that decreases the amount of active TACE on the cell surface.