Tumor necrosis factor-alpha converting enzyme (TACE/ADAM-17) is a metalloprotease disintegrin that cleaves a variety of membrane proteins, releasing ("shedding") their extracellular domains from cells. Most TACE-mediated shedding events occur at low basal rates that are enhanced by treatment of cells with a variety of stimuli. To study the mechanism of induced shedding, we developed a peptide-cleavage assay that measures the cellular TACE activity. In unstimulated cells, cleavage of a TNFalpha processing-site peptide was mediated mainly by enzymes other than TACE. However, stimulation of cells with phorbol-12-myristate-13-acetate (PMA) increased peptide cleavage in a TACE-dependent manner. PMA treatment did not increase the amount of TACE on the cell surface. Moreover, the cytoplasmic domain of TACE was not required for the induced activity. Based on these observations, induction of TACE-mediated shedding events occurs at least in part via an increase in the enzymatic activity of cellular TACE, independent of its cytoplasmic domain.