The identification of mechanisms that maintain stem cell niche architecture and homeostasis is fundamental to our understanding of tissue renewal and repair. Cell adhesion is a well-characterized mechanism for developmental morphogenetic processes, but its contribution to the dynamic regulation of adult mammalian stem cell niches is still poorly defined. We show that N-cadherin-mediated anchorage of neural stem cells (NSCs) to ependymocytes in the adult murine subependymal zone modulates their quiescence. We further identify MT5-MMP as a membrane-type metalloproteinase responsible for the shedding of the N-cadherin ectodomain in this niche. MT5-MMP is co-expressed with N-cadherin in adult NSCs and ependymocytes and, whereas MT5-MMP-mediated cleavage of N-cadherin is dispensable for the regulation of NSC generation and identity, it is required for proper activation of NSCs under physiological and regenerative conditions. Our results indicate that the proliferative status of stem cells can be dynamically modulated by regulated cleavage of cell adhesion molecules.