The cellular receptor for urokinase-type plasminogen activator (uPAR) is a glycolipid-anchored three-domain membrane protein playing a central role in pericellular plasminogen activation. We have found that urokinase (uPA) can cleave its receptor between domains 1 and 2 generating a cell-associated uPAR variant without ligand-binding properties. In extracts of U937 cells there are two uPAR variants which after complete deglycosylation have apparent molecular masses of 35,000 and 27,000. Analysis with monoclonal antibodies showed that these variants represented the intact uPAR and a two-domain form, uPAR(2+3), lacking ligand-binding domain 1. Trypsin treatment showed that both variants are present on the outside of the cells. Addition to the culture medium of an anticatalytic monoclonal antibody to uPA inhibited the formation of the uPAR(2+3), indicating that uPA is involved in its generation. Purified uPAR can be cleaved directly by uPA as well as by plasmin. The uPA-catalyzed cleavage does not require binding of the protease to the receptor through its epidermal growth factor-like receptor-binding domain, since low molecular weight uPA that lacks this domain also cleaves uPAR. This unusual reaction in which a specific binding protein is proteolytically inactivated by its own ligand may represent a regulatory step in the plasminogen activation cascade.