Tylosis with Oesophageal Cancer (TOC), is a rare familial disorder caused by cytoplasmic mutations in inactive rhomboid 2 (iR2). iR2 and the related iR1 are key regulators of the membrane-anchored metalloprotease ADAM17, which is required for activating EGFR ligands and for releasing pro-inflammatory cytokines such as TNFa. A cytoplasmic deletion in iR2, including the TOC site, leads to curly whiskers and bare skin (cub) in mice, whereas a knock-in TOC mutation causes less severe alopecia and wavy fur. The abnormal skin and hair phenotypes of iR2cub/cub and iR2toc/toc mice depend on amphiregulin and ADAM17, since loss of one allele of either gene rescues the fur phenotypes. Remarkably, iR1-/-iR2cub/cub mice survive, despite a lack of mature ADAM17, whereas iR2cub/cubAdam17-/-mice die perinatally, suggesting that the iR2cub gain-of-function mutation requires the presence of ADAM17, but not its catalytic activity. iR2toc does not substantially reduce the levels of mature ADAM17, but instead affects its function in a substrate selective manner. Our findings provide new insights into the role of the cytoplasmic domain of iR2 in vivo, with implications for the treatment of TOC patients.