N-acylethanolamine-hydrolyzing acid amidase (NAAA) is a lysosomal enzyme hydrolyzing bioactive N-acylethanolamines, including anandamide and N-palmitoylethanolamine. Previously, we suggested that NAAA is glycosylated and proteolytically cleaved. Here, we investigated the mechanism and significance of the cleavage of human NAAA overexpressed in human embryonic kidney 293 cells. Western blotting with anti-NAAA antibody revealed that most of NAAA in the cell homogenate was the cleaved 30-kDa form. However, some of NAAA were released outside the cells and the extracellular enzyme was mostly the uncleaved 48-kDa form. When incubated at pH 4.5, the 48-kDa form was time-dependently converted to the 30-kDa form with concomitant increase in the N-palmitoylethanolamine-hydrolyzing activity. The purified 48-kDa form was also cleaved and activated. However, the cleavage did not proceed at pH 7.4 or in the presence of p-chloromercuribenzoic acid. The mutant C126S was resistant to the cleavage and remained inactive. These results suggested that this specific proteolysis is a self-catalyzed activation step. We next determined N-glycosylation sites of human NAAA by site-directed mutagenesis addressed to asparagine residues in six potential N-glycosylation sites. The results exhibited that Asn-37, Asn-107, Asn-309, and Asn-333 are actual N-glycosylation sites. The glycosylation appeared to play an important role in stabilizing the enzyme protein.