The type II transmembrane serine protease TMPRSS6 (also known as matriptase-2) controls iron homeostasis through its negative regulation of expression of hepcidin, a key hormone involved in iron metabolism. Upstream of the hepcidin-regulated signaling pathway, TMPRSS6 cleaves its target substrate hemojuvelin (HJV) at the plasma membrane, but the dynamics of the cell-surface expression of the protease have not been addressed. Here, we report that TMPRSS6 undergoes constitutive internalization in transfected HEK293 cells and in two human hepatic cell lines, HepG2 and primary hepatocytes, both of which express TMPRSS6 endogenously. Cell surface-labeled TMPRSS6 was internalized and was detected in clathrin- and AP-2-positive vesicles via a dynamin-dependent pathway. The endocytosed TMPRSS6 next transited in early endosomes and then to lysosomes. Internalization of TMPRSS6 is dependent on specific residues within its N-terminal cytoplasmic domain, as site-directed mutagenesis of these residues abrogated internalization and maintained the enzyme at the cell surface. Cells coexpressing these mutants and HJV produced significantly decreased levels of hepcidin compared with wild-type TMPRSS6 due to the sustained cleavage of HJV at the cell surface by TMPRSS6 mutants. Our results underscore for the first time the importance of TMPRSS6 trafficking at the plasma membrane in the regulation of hepcidin expression, an event that is essential for iron homeostasis.