Exploitation of host components by microbes to promote their survival in the hostile host environment has been a recurring theme in recent years. Available data indicate that bacterial pathogens activate ectodomain shedding of host cell surface molecules to enhance their virulence. We reported previously that several major bacterial pathogens activate ectodomain shedding of syndecan-1, the major heparan sulfate proteoglycan of epithelial cells. Here we define the molecular basis of how Staphylococcus aureus activates syndecan-1 shedding. We screened mutant S. aureus strains devoid of various toxin and protease genes and found that only strains lacking both alpha-toxin and beta-toxin genes do not stimulate shedding. Mutations in the agr global regulatory locus, which positively regulates expression of alpha- and beta-toxins and other exoproteins, also abrogated the capacity to stimulate syndecan-1 shedding. Furthermore, purified S. aureus alpha- and beta-toxins, but not enterotoxin A and toxic shock syndrome toxin-1, rapidly potentiated shedding in a concentration-dependent manner. These results establish that S. aureus activates syndecan-1 ectodomain shedding via its two virulence factors, alpha- and beta-toxins. Toxin-activated shedding was also selectively inhibited by antagonists of the host cell shedding mechanism, indicating that alpha- and beta-toxins shed syndecan-1 ectodomains through stimulation of the host cell's shedding machinery. Interestingly, beta-toxin, but not alpha-toxin, also enhanced ectodomain shedding of syndecan-4 and heparin-binding epidermal growth factor. Because shedding of these ectodomains has been implicated in promoting bacterial pathogenesis, activation of ectodomain shedding by alpha-toxin and beta-toxin may be a previously unknown virulence mechanism of S. aureus.