Tumor necrosis factor-a (TNF) converting enzyme (TACE) is responsible for shedding of various membrane proteins including proinflammatory cytokine TNF. In vivo regulation of TACE is poorly understood mainly due to lack of reliable methodology to measure TACE activity in cell-based assays. Here we report a novel enzyme assay that enables continuous real-time measurement of TACE activity on the surface of live cells. Cells were incubated with a new fluorescent resonance energy transfer peptide consisting of a TACE-sensitive TNF sequence and fluorescein-tetramethylrhodamine (FAM-TAMRA), and enzyme activity was monitored by the rate of increase in fluorescent signal due to peptide cleavage. Validation studies using resting as well as stimulated monocytic cells indicated that the assay was sensitive, reproducible and quantitative. Pharmacological studies with various inhibitors indicated that the observed enzyme activity could largely be ascribed to TACE. Thus, the FAM-TAMRA peptide provides a powerful tool for measurement of constitutive and inducible cellular TACE activity. The principles developed may be applied to analyses of enzyme activity of various sheddases on live cells. Keywords: ADAM; ectodomain shedding; enzyme activity; FRET; protease; TACE; TNF Ectodomain shedding of membrane proteins is recognized as a potent mechanism for downregulation of their cell-associated activity while at the same time enabling their function as soluble mediators. 1,2 Tumor necrosis factor-a (TNF) converting enzyme (TACE), a member of the ADAM (a disintegrin and metalloprotease) family of proteases (ADAM-17), is the first discovered mammalian sheddase, responsible for cleavage of a variety of membrane proteins, including the proinflammatory cytokine TNF, transforming growth factor-a, p75 TNF receptor and L-selectin. 3-8 As a TNF sheddase, TACE regulates the in vivo cleavage of membranebound proTNF to release soluble TNF, 3,4 which has been shown to play a crucial role in acute and chronic inflammation. Thus, analysis of TACE activity should provide important insights into the pathophysiology of inflammatory diseases and potentially help the future development of TACEtargeted therapies. However, the mechanism of in vivo regulation of TACE activity is not well understood, 7-9 mainly due to lack of accurate methods for measuring TACE activity on viable cells. Fluorescence resonance energy transfer (FRET) peptides provide useful tools for kinetic studies of metalloproteases in solution. 10,11 These substrates consist of a donor fluorophore and a light-absorbing acceptor, attached to the terminal residues of a peptide susceptible to cleavage by a protease. Once the substrate is cleaved, increased fluorescence is observed due to loss of internal quenching, allowing quantitative measurement of real-time enzyme activity. The common donor/acceptor pairs are 4-(dimethylaminoazo) benzene-4-carboxyl (Dabcyl) and 5-(2-aminoethylamino)-1-naphthalenesulfonic (Edans), and (7-methoxycoumarin-4-yl) acetyl (Mca) and 2,4-dinitrophenyl (Dnp) or 3-...