Diverse membrane proteins are solubilized by a specific proteolytic cleavage in the stalk sequence adjacent to the membrane anchor, with release of the extracellular domain. Examples are the amyloid precursor protein, membrane-bound growth factors and angiotensin-converting enzyme (ACE). The identities and characteristics of the responsible proteases remain elusive. We have studied this process in Chinese hamster ovary (CHO) cells stably expressing wild-type ACE (WT-ACE) or juxtamembrane (stalk) deletion or chimaera mutants. Determination of the C termini (i.e. the cleavage sites) of released, soluble wild-type and mutant ACE by MALDI-TOF mass spectrometry indicated that the membrane-protein-solubilizing protease (MPSP) in CHO cells is not constrained by a particular cleavage site motif or by a specific distance from the membrane, but instead may position itself with respect to the putative proximal, folded extracellular domain adjacent to the stalk. Nevertheless, kinetic analyses of release rates indicated that a minimum distance from the membrane must be preserved. Interestingly, soluble full-length (anchor-plus) WT-ACE incubated with fractions of, or intact, CHO cells was not cleaved. In all cases, release was stimulated by a media change or by the addition of phorbol ester, with rate enhancements of 5- and 50-fold, respectively, for WT-ACE. The phorbol ester effect was abolished by staurosporine, a protein kinase C (PKC) inhibitor. We propose that the CHO cell MPSP that solubilizes ACE: (1) only cleaves proteins embedded in a membrane; (2) requires an accessible stalk and cleaves at a minimum distance from both the membrane and proximal extracellular domain; (3) positions itself primarily with respect to the proximal extracellular domain and (4) is regulated in part by a PKC-dependent mechanism.