Neuroglycan C (NGC) is a transmembrane-type of chondroitin sulfate proteoglycan with an epidermal growth factor (EGF)-like module that is exclusively expressed in the CNS. Because ectodomain shedding is a common processing step for many transmembrane proteins, we examined whether NGC was subjected to proteolytic cleavage. Western blotting demonstrated the occurrence of a soluble form of NGC with a 75 kDa core glycoprotein in the soluble fraction of the young rat cerebrum. In contrast, full-length NGC with a 120 kDa core glycoprotein and its cytoplasmic fragment with a molecular size of 35 kDa could be detected in the membrane fraction. The soluble form of NGC was also detectable in culture media of fetal rat neurons, and the full-length form existed in cell layers. The amount of the soluble form in culture media was decreased by adding a physiological protease inhibitor such as a tissue inhibitor of metalloproteinase (TIMP)-2 or TIMP-3, but not by adding TIMP-1. Both EGF-like and neurite outgrowth-promoting activity of the NGC ectodomain may be regulated by this proteolytic processing.