CD16a and CD16b are IgG Fc receptors expressed by human natural killer (NK) cells and neutrophils, respectively. Both CD16 isoforms undergo a rapid down-regulation in expression by ADAM17-mediated proteolytic cleavage upon cell activation by various stimuli. We examined soluble CD16 released from activated NK cells and neutrophils by mass spectrometric analysis, and identified three separate cleavage sites in close proximity at P1/P1' positions alanine195/valine196, valine196/serine197, and threonine198/isoleucine199, revealing a membrane proximal cleavage region in CD16. Substitution of the serine at position 197 in the middle of the cleavage region for a proline (S197P) effectively blocked CD16a and CD16b cleavage in cell-based assays. We also show that CD16a/S197P was resistant to cleavage when expressed in the human NK cell line NK92 and primary NK cells derived from genetically-engineered human induced pluripotent stem cells. CD16a is a potent activating receptor and despite blocking CD16a shedding, the S197P mutation did not disrupt IgG binding by the receptor or its activation of NK92 cells by antibody-treated tumor cells. Our findings provide further characterization of CD16 cleavage by ADAM17 and they demonstrate that a non-cleavable version of CD16a can be expressed in engineered NK cells.