Growth differentiation factor 8 (GDF8), a.k.a. myostatin, is a member of the larger TGFβ superfamily of signaling ligands. GDF8 has been well characterized as a negative regulator of muscle mass. After synthesis, GDF8 is held latent by a noncovalent complex between the N-terminal prodomain and the signaling ligand. Activation of latent GDF8 requires proteolytic cleavage of the prodomain at residue D99 by a member of the tolloid family of metalloproteases. While tolloid proteases cleave multiple substrates, they lack a conserved consensus sequence. Here we investigate the tolloid cleavage site of the GDF8 prodomain to determine what residues contribute to tolloid recognition and subsequent proteolysis. Using sequential alanine mutations, we identified several residues adjacent to the scissile bond, including Y94, that when mutated, abolish tolloid-mediated activation of latent GDF8. Using the astacin domain of Tll1 (Tolloid Like 1) we determined that prodomain mutants were more resistant to proteolysis. Purified latent complexes harboring the prodomain mutations, D92A and Y94A, impeded activation by tolloid but could be fully activated under acidic conditions. Finally, we show that co-expression of GDF8 WT with prodomain mutants that were tolloid resistant, suppressed GDF8 activity. Taken together our data demonstrate that residues towards the N-terminus of the scissile bond are important for tolloid-mediated activation of GDF8 and that tolloid-resistant version of the GDF8 prodomain can function dominant negative to WT GDF8.