Many membrane-bound proteins, including cytokines, receptors, and growth factors, are proteolytically cleaved to release a soluble form of their extracellular domain. The tumor necrosis factor (TNF)-alpha converting enzyme (TACE/ADAM-17) is a transmembrane metalloproteinase responsible for the proteolytic release or "shedding" of several cell-surface proteins, including TNF and p75 TNFR. We established a TACE-reconstitution system using TACE-deficient cells co-transfected with TACE and substrate cDNAs to study TACE function and regulation. Using the TACE-reconstitution system, we identified two additional substrates of TACE, interleukin (IL)-1R-II and p55 TNFR. Using truncations and chimeric constructs of TACE and another ADAM family member, ADAM-10, we studied the function of the different domains of TACE in three shedding activities. We found that TACE must be expressed with its membrane-anchoring domain for phorbol ester-stimulated shedding of TNF, p75 TNFR, and IL-1R-II, but that the cytoplasmic domain is not required for the shedding of these substrates. The catalytic domain of ADAM-10 could not be functionally substituted for that of TACE. IL-1R-II shedding required the cysteine-rich domain of TACE as well as the catalytic domain, whereas TNF and p75 TNFR shedding required only the tethered TACE catalytic domain.