The low density lipoprotein (LDL) receptor-related protein (LRP) is a multifunctional cell surface receptor that interacts through its cytoplasmic tail with adaptor and scaffold proteins that participate in cellular signaling. Its extracellular domain, like that of the signaling receptor Notch and of amyloid precursor protein (APP), is proteolytically processed at multiple positions. This similarity led us to investigate whether LRP, like APP and Notch, might also be cleaved at a third, intramembranous or cytoplasmic site, resulting in the release of its intracellular domain. Using independent experimental approaches we demonstrate that the cytoplasmic domain is released by a gamma-secretase-like activity and that this event is modulated by protein kinase C. Furthermore, cytoplasmic adaptor proteins that bind to the LRP tail affect the subcellular localization of the free intracellular domain and may regulate putative signaling functions. Finally, we show that the degradation of the free tail fragment is mediated by the proteasome. These findings suggest a novel role for the intracellular domain of LRP that may involve the subcellular translocation of preassembled signaling complexes from the plasma membrane.