FtsH is a cytoplasmic membrane protein that has N-terminally located transmembrane segments and a main cytosolic region consisting of AAA-ATPase and Zn2+-metalloprotease domains. It forms a homo-hexamer, which is further complexed with an oligomer of the membrane-bound modulating factor HflKC. FtsH degrades a set of short-lived proteins, enabling cellular regulation at the level of protein stability. FtsH also degrades some misassembled membrane proteins, contributing to their quality maintenance. It is an energy-utilizing and processive endopeptidase with a special ability to dislocate membrane protein substrates out of the membrane, for which its own membrane-embedded nature is essential. We discuss structure-function relationships of this intriguing enzyme, including the way it recognizes the soluble and membrane-integrated substrates differentially, on the basis of the solved structure of the ATPase domain as well as extensive biochemical and genetic information accumulated in the past decade on this enzyme.