TMEFF2 is a type I transmembrane protein with two follistatin (FS) and one EGF‐like domain over‐expressed in prostate cancer; however its biological role in prostate cancer development and progression remains unclear, which may, at least in part, be explained by its proteolytic processing. The extracellular part of TMEFF2 (TMEFF2‐ECD) is cleaved by ADAM17 and the membrane‐retained fragment is further processed by the gamma‐secretase complex. TMEFF2 shedding is increased with cell crowding, a condition associated with the tumour microenvironment, which was mediated by oxidative stress signalling, requiring jun‐kinase (JNK) activation. Moreover, we have identified that TMEFF2 is also a novel substrate for other proteases implicated in prostate cancer, including two ADAMs (ADAM9 and ADAM12) and the type II transmembrane serine proteinases (TTSPs) matriptase‐1 and hepsin. Whereas cleavage by ADAM9 and ADAM12 generates previously identified TMEFF2‐ECD, proteolytic processing by matriptase‐1 and hepsin produced TMEFF2 fragments, composed of TMEFF2‐ECD or FS and/or EGF‐like domains as well as novel membrane retained fragments. Differential TMEFF2 processing from a single transmembrane protein may be a general mechanism to modulate transmembrane protein levels and domains, dependent on the repertoire of ADAMs or TTSPs expressed by the target cell.