Stem cell factor (SCF) is produced by stromal cells as a membrane-bound molecule, which may be proteolytically cleaved at a site close to the membrane to produce a soluble bioactive form. The proteases producing this cleavage are unknown. In this study, we demonstrate that human mast cell chymase, a chymotrypsin-like protease, cleaves SCF at a novel site. Cleavage is at the peptide bond between Phe-158 and Met-159, which are encoded by exon 6 of the SCF gene. This cleavage results in a soluble bioactive product that is 7 amino acids shorter at the C terminus than previously identified soluble SCF. This research shows the identification of a physiologically relevant enzyme that specifically cleaves SCF. Because mast cells express the KIT protein, the receptor for SCF, and respond to SCF by proliferation and degranulation, this observation identifies a possible feedback loop in which chymase released from mast cell secretory granules may solubilize SCF bound to the membrane of surrounding stromal cells. The liberated soluble SCF may in turn stimulate mast cell proliferation and differentiated functions; this loop could contribute to abnormal accumulations of mast cells in the skin and hyperpigmentation at sites of chronic cutaneous inflammation.