Epithin was originally identified as a mouse type II membrane serine protease. Its human orthologue membrane type-serine protease 1 (MT-SP1)/matriptase has been reported to be localized on the plasma membrane. In addition, soluble forms of matriptase were isolated from human breast milk and breast cancer cell-conditioned medium. In this paper, we report a processing mechanism that appears to be required for the release of epithin. CHO-K1 or COS7 cells transfected with single full-length epithin cDNA generated two different-sized proteins in cell lysates, 110 and 92 kDa. The 92-kDa epithin was found to be an N-terminally truncated form of the 110-kDa epithin, and it was the only form detected in the culture medium. The 92-kDa epithin was also found on the cell surface, where it was anchored by the N-terminal fragment. The results of in vivo cell labeling experiments indicate that the 110-kDa epithin is rapidly processed to the 92-kDa epithin. Using site-directed mutagenesis experiments, we identified Gly(149) of the GSVIA sequence in epithin as required for the processing and release of the protein. These results suggest that N-terminal processing of epithin at Gly(149) is a necessary prerequisite step for release of the protein.