Cleavage and subsequent release of the extracellular domains of receptor protein tyrosine phosphatases (RPTP) occur at high cell density and may have an important role in regulating their activity. Because cleavage of RPTP occurs at a target motif (RXK/RR) recognized by a family of subtilisin/kexin-like endoproteases, we postulated that members of the subtilisin family may have an important role in this cleavage. We show in this report that the membrane-associated RPTPmu--both in its full 200-kDa form and as a 100-kDa cleavage product--is upregulated 4- and 7-fold, respectively, as human umbilical vein endothelial cells (HUVEC) approach confluence. To determine whether RPTPmu cleavage depended on PC5 (a subtilisin/kexin like endoprotease present in endothelial cells), we transfected COS cells with expression plasmids coding for RPTPmu and PC5 or the closely related protease PACE4. PC5, but not PACE4, cleaved RPTPmu, and RPTPmu cleavage was absent in COS cells transfected with an expression plasmid encoding a mutant PC5 whose active-site serine had been mutated to alanine. We also performed RNA blot analysis to determine whether PC5 expression was affected by confluence in HUVEC. PC5 mRNA levels were upregulated by more than 30-fold when confluence in HUVEC increased from 25% to 100%. These results indicate that PC5 may have an important role in mediating the cleavage of RPTPmu in response to contact inhibition in HUVEC.