In the nervous system, rapidly occurring processes such as neuronal transmission and calcium signaling are affected by short-term inhibition of proteasome function. It is unclear how proteasomes are able to acutely regulate such processes, as this action is inconsistent with their canonical role in proteostasis. Here we describe a mammalian nervous-system-specific membrane proteasome complex that directly and rapidly modulates neuronal function by degrading intracellular proteins into extracellular peptides that can stimulate neuronal signaling. This proteasome complex is closely associated with neuronal plasma membranes, exposed to the extracellular space, and catalytically active. Selective inhibition of the membrane proteasome complex by a cell-impermeable proteasome inhibitor blocked the production of extracellular peptides and attenuated neuronal-activity-induced calcium signaling. Moreover, we observed that membrane-proteasome-derived peptides were sufficient to induce neuronal calcium signaling. Our discoveries challenge the prevailing notion that proteasomes function primarily to maintain proteostasis, and highlight a form of neuronal communication that takes place through a membrane proteasome complex.