CD44 is a widely expressed integral membrane glycoprotein that serves as a specific adhesion receptor for the extracellular matrix glycosaminoglycan hyaluronan. CD44 participates in a variety of physiological and pathological processes through its role in cell adhesion. Under appropriate conditions, the ectodomain of CD44 is proteolytically removed from the cell surface. In this study we show that excessive CD44 shedding can be induced in mouse fibroblasts and monocytes upon exposure of these cells to a CD44-specific Ab immobilized on plastic, whereas treatment with phorbol ester induces significantly enhanced CD44 release from the monocytes only. CD44 shedding proceeds normally in fibroblasts and monocytes deficient in TNF-alpha converting enzyme (TACE), a sheddase involved in the processing of several substrates. Conversely, activation of the CD44 protease has no effect on the release of TNF-alpha from TACE-expressing cells, although the same metalloprotease inhibitor effectively blocks both TACE and the CD44 sheddase. Concomitant with anti-CD44 Ab- or phorbol ester-induced CD44 shedding, dramatic changes are observed in cell morphology and the structure of the actin cytoskeleton. Disruption of actin assembly with cytochalasin reduces CD44 shedding, but not the release of TNF-alpha. Moreover, pharmacological activation of Rho family GTPases Rac1 and Cdc42, which regulate actin filament assembly into distinct cytoskeletal structures, has a profound effect on CD44 release. We conclude that the CD44 sheddase and TACE are distinct enzymes, and that Ab- and phorbol ester-enhanced cleavage of CD44 is controlled in a cell type-dependent fashion by Rho GTPases through the cytoskeleton.