Rhomboid-1 is a serine protease that cleaves the membrane domain of the Drosophila EGF-family protein, Spitz, to release a soluble growth factor. Several vertebrate rhomboid-like proteins have been identified, although their substrates and functions remain unknown. The human rhomboid, RHBDL2, cleaves the membrane domain of Drosophila Spitz when the proteins are co-expressed in mammalian cells. However, the membrane domains of several mammalian EGF-family proteins were not cleaved by RHBDL2, suggesting that the endogenous targets of the human protease are not EGF-related factors. We demonstrate that the amino acid sequence at the luminal face of the membrane domain of a substrate protein determines whether it is cleaved by RHBDL2. Based on this finding, we predicted B-type ephrins as potential RHBDL2 substrates. We found that one of these, ephrinB3, was cleaved so efficiently by the protease that little ephrinB3 was detected on the surface of cells co-expressing RHBDL2. These results raise the possibility that RHBDL2-mediated proteolytic processing may regulate intercellular interactions between ephrinB3 and eph receptors.