Photoreceptor cadherin (prCAD) is a distinctive cadherin family member that is concentrated at the base of rod and cone outer segments and is required for their structural integrity. During retinal development, prCAD localizes to the site of the future outer segment before rhodopsin or other phototransduction proteins. In vivo, prCAD undergoes a single proteolytic cleavage that releases the ectodomain as a soluble fragment. The C-terminal fragment containing the transmembrane and cytosolic domains remains associated with the outer segment. In rds(-/-) retinas, in which outer segment assembly is severely disrupted because of the absence of retinal degeneration slow (RDS)/peripherin, an essential outer segment structural protein, the level of prCAD is increased, whereas the levels of other outer segment proteins are decreased relative to wild type retinas. Additionally, the ratio of intact:cleaved prCAD polypeptides is increased in rds(-/-) retinas. These data imply that prCAD ectodomain cleavage is an integral part of the outer segment assembly process, and they further suggest that outer segment assembly might be driven, at least in part, by the near irreversibility of proteolysis.