Proteolytic cleavage of the extracellular domain of the type II IL-1 decoy receptor (IL-1RII) generates soluble IL-1-binding proteins that prevent excessive bioactivity by binding free IL-1. In this study we report that an aminopeptidase, aminopeptidase regulator of TNFR1 shedding (ARTS-1), is required for IL-1RII shedding. Coimmunoprecipitation experiments demonstrate an association between endogenous membrane-associated ARTS-1 and a 47-kDa IL-1RII, consistent with ectodomain cleavage of the membrane-bound receptor. A direct correlation exists between ARTS-1 protein expression and IL-1RII shedding, as cell lines overexpressing ARTS-1 have increased IL-1RII shedding and decreased membrane-associated IL-1RII. Basal IL-1RII shedding is absent from ARTS-1 knockout cell lines, demonstrating that ARTS-1 is required for constitutive IL-1RII shedding. Similarly, PMA-mediated IL-1RII shedding is almost entirely ARTS-1-dependent. ARTS-1 expression also enhances ionomycin-induced IL-1RII shedding. ARTS-1 did not alter levels of membrane-associated IL-1RI or IL-1R antagonist release from ARTS-1 cell lines, which suggests that the ability of ARTS-1 to promote shedding of IL-1R family members may be specific for IL-1RII. Further, increased IL-1RII shedding by ARTS-1-overexpressing cells attenuates the biological activity of IL-1beta. We conclude that the ability of ARTS-1 to enhance IL-1RII shedding represents a new mechanism by which IL-1-induced cellular events can be modulated. As ARTS-1 also promotes the shedding of the structurally unrelated 55-kDa, type I TNF receptor and the IL-6R, we propose that ARTS-1 may play an important role in regulating innate immune and inflammatory responses by increasing cytokine receptor shedding.