Regulated intramembrane proteolysis by members of the site-2 protease (S2P) family is an important signaling mechanism conserved from bacteria to humans. Here we report the crystal structure of the transmembrane core domain of an S2P metalloprotease from Methanocaldococcus jannaschii. The protease consists of six transmembrane segments, with the catalytic zinc atom coordinated by two histidine residues and one aspartate residue approximately 14 angstroms into the lipid membrane surface. The protease exhibits two distinct conformations in the crystals. In the closed conformation, the active site is surrounded by transmembrane helices and is impermeable to substrate peptide; water molecules gain access to zinc through a polar, central channel that opens to the cytosolic side. In the open conformation, transmembrane helices alpha1 and alpha6 separate from each other by 10 to 12 angstroms, exposing the active site to substrate entry. The structure reveals how zinc embedded in an integral membrane protein can catalyze peptide cleavage.