The neural cell adhesion molecule "close homologue of L1," termed CHL1, has functional importance in the nervous system. CHL1 is expressed as a transmembrane protein of 185 kDa, and ectodomain shedding releases soluble fragments relevant for its physiological function. Here we describe that ADAM8, a member of the family of metalloprotease disintegrins cleaves a CHL1-Fc fusion protein in vitro at two sites corresponding to release of the extracellular domain of CHL1 in fibronectin (FN) domains II (125 kDa) and V (165 kDa), inhibited by batimastat (BB-94). Cleavage of CHL1-Fc in the 125-kDa fragment was not detectable under non-reducing conditions arguing that cleavage resulting in the 165-kDa fragment is more relevant in releasing soluble CHL1 in vivo. In cells transfected with full-length ADAM8, membrane proximal cleavage of CHL1 was similar and not stimulated by phorbol ester 12-O-tetradecanoylphorbol-13-acetate and pervanadate. No cleavage of CHL1 was observed in cells expressing either inactive ADAM8 with a Glu330 to Gln exchange (EQ-A8), or active ADAM10 and ADAM17. Consequently, processing of CHL1 was hardly detectable in brain extracts of ADAM8-deficient mice but enhanced in a neurodegenerative mouse mutant. CHL1 processed by ADAM8 in supernatants of COS-7 cells and in co-culture with cerebellar granule neurons was very potent in stimulating neurite outgrowth and suppressing neuronal cell death, not observed in cells co-transfected with CHL1/EQ-A8, CHL1/ADAM10, or CHL1/ADAM17. Taken together, we propose that ADAM8 plays an important role in physiological and pathological cell interactions by a specific release of functional CHL1 from the cell surface.