In skin, hemidesmosomal protein complexes attach the epidermis to the dermis and are critical for stable connection of the basal epithelial cell cytoskeleton with the basement membrane (BM). In muscle, a similar supramolecular aggregate, the dystrophin glycoprotein complex links the inside of muscle cells with the BM. A component of the muscle complex, dystroglycan (DG), also occurs in epithelia. In this study, we characterized the expression and biochemical properties of authentic and recombinant DG in human skin and cutaneous cells in vitro. We show that DG is present at the epidermal BM zone, and it is produced by both keratinocytes and fibroblasts in vitro. The biosynthetic precursor is efficiently processed to the alpha- and beta-DG subunits; and, in addition, a distinct extracellular segment of the transmembranous beta-subunit is shed from the cell surface by metalloproteinases. Shedding of the beta-subunit releases the alpha-subunit from the DG complex on the cell surface into the extracellular space. The shedding is enhanced by IL-1beta and phorbol esters, and inhibited by metalloproteinase inhibitors. Deficiency of perlecan, a major ligand of alpha-DG, enhanced shedding suggesting that lack of a binding partner destabilizes the epithelial DG complex and makes it accessible to proteolytic processing.