The testis isozyme of angiotensin-converting enzyme (ACE; EC 3.4.15.1) is a membrane-bound protein that, apart from the first 35 N-terminal residues, is identical to the C-terminal half of somatic ACE and contains the same putative C-terminal membrane anchor. Stable transfection of Chinese hamster ovary (CHO) cells with an expression vector containing the full-length human testis ACE cDNA results in the expression of two forms of recombinant human testis ACE (hTACE): membrane-bound ACE and, surprisingly, large quantities (up to 3 mg/liter) of soluble hTACE in the conditioned medium. Both forms are fully active and are physicochemically similar. However, by phase separation in Triton X-114, the soluble enzyme is hydrophilic, as is an anchor-minus mutant hTACE recovered from the medium of CHO cells transfected with a vector that contains a 3'-truncated testis ACE cDNA lacking the sequence encoding the membrane anchor. In contrast, the membrane-bound hTACE is amphipathic but is converted to a hydrophilic form on treatment with trypsin. The data establish that in ACE the hydrophobic sequence near the C terminus is necessary for membrane anchoring. Moreover, in CHO cells, membrane-bound hTACE is apparently solubilized by proteolytic cleavage of this anchor. A similar mechanism may account for the release of endothelial ACE in vivo to generate serum ACE and more generally for the constitutive processing and solubilization of analogously anchored proteins such as the amyloid precursor protein, among others. The release of membrane-bound ACE in CHO cells may, therefore, provide a useful system for the study of membrane-protein-solubilizing proteases.