The mechanisms by which proteases activate the epithelial sodium channel (ENaC) are not yet fully understood. We investigated the effect of extracellular proteases on rat ENaC heterologously expressed in Xenopus laevis oocytes. Application of trypsin increased ENaC whole-oocyte currents by about 8-fold without a concomitant increase in channel surface expression. The stimulatory effect of trypsin was preserved in oocytes expressing alphagamma-ENaC, but was abolished in oocytes expressing alphabeta-ENaC. Thus, the gamma-subunit appears to be essential for channel activation by extracellular proteases. Site-directed mutagenesis of a putative prostasin cleavage site in the extracellular loop of the gamma-subunit revealed that mutating the 181Lys residue to alanine (gammaK181A) increases ENaC baseline whole-oocyte currents, decreases channel surface expression, and largely reduces the stimulatory effect of extracellular proteases (trypsin, chymotrypsin and human neutrophil elastase). In single-channel recordings from outside-out patches we demonstrated that the gammaK181A mutation essentially abolishes the activation of near-silent channels by trypsin, while a stimulatory effect of trypsin on channel gating is preserved. This apparent dual effect of trypsin on channel gating and on the recruitment of near-silent channels was confirmed by experiments using the beta518C mutant ENaC which can be converted to a channel with an open probability of nearly one by exposure to a sulfhydryl reagent. Interestingly, the gammaK181A mutation results in the spontaneous appearance of a 67 kDa fragment of the gamma-subunit in the plasma membrane which can be prevented by a furin inhibitor and also occurs after channel activation by extracellular trypsin. This suggests that the mutation promotes channel cleavage and activation by endogenous proteases. This would lower the pool of near-silent channels and explain the constitutive activation and reduced responsiveness of the mutant channel to extracellular proteases. We conclude that the mutated site (K181A) affects a region in the gamma-subunit of ENaC that is functionally important for the activation of near-silent channels by extracellular proteases.