An unusual protease gamma-secretase requires functional presenilins and cleaves substrates (e.g. amyloid beta-protein precursor and Notch) with very loose amino acid sequence specificity within the transmembrane region. Here we report that ErbB4, a tyrosine kinase receptor for neuregulins, is a substrate for presenilin-dependent gamma-secretase. Our studies show that constitutive ectodomain shedding of full-length ErbB4 yields the approximately 80-kDa membrane-associated C-terminal fragment (B4-CTF). Subsequent intramembrane cleavage of the B4-CTF was inhibited in the cells devoid of functional presenilins or by treatment of cells with a gamma-secretase inhibitor, leading to enhanced accumulation of B4-CTF. Furthermore, an in vitro gamma-secretase assay demonstrated that the intracellular domain of ErbB4 (B4-ICD) was produced and subsequently released into the soluble fraction in a presenilin-dependent manner. We have also shown that ectopically expressed B4-ICD is localized to the nucleus, suggesting that the presenilin-dependent cleavage of ErbB4 generates the soluble B4-ICD that functions in the nucleus presumably at transcriptional level. Our study indicates that ErbB4 represents a first receptor tyrosine kinase that undergoes intramembrane proteolysis and may mediate a novel signaling function independent of its canonical role as a receptor tyrosine kinase. Our studies also support the idea that presenilins play a generic role in intramembrane cleavage of selected type I membrane proteins.