Protein-tyrosine kinase 7 (PTK7) is a member of the defective receptor protein-tyrosine kinases and is known to function as a regulator of planar cell polarity during development. Its expression is up-regulated in some cancers including colon carcinomas. A 100-kDa fragment of PTK7 was detected in the culture media from colon cancer cells and HEK293 cells. The shed fragment was named sPTK7-Ig1-7 because its molecular mass was very similar to that of the entire extracellular domain of PTK7 that contains immunoglobulin-like loops 1 to 7 (Ig1-7). The shedding of sPTK7-Ig1-7 was enhanced by treatment with phorbol 12-myristate 13-acetate. In addition to the sPTK7-Ig1-7 found in the culture medium, two C-terminal fragments of PTK7 were detected in the cell lysates: PTK7-CTF1, which includes a transmembrane segment and a cytoplasmic domain, and PTK7-CTF2, which lacks most of the transmembrane segment from PTK7-CTF1. Analysis of PTK7 processing in the presence of various protease inhibitors or after knockdown of potential proteases suggests that shedding of PTK7 into sPTK7-Ig1-7 and PTK7-CTF1 is catalyzed by ADAM17, and further cleavage of PTK7-CTF1 into PTK7-CTF2 is mediated by the γ-secretase complex. PTK7-CTF2 localizes to the nucleus and enhances proliferation, migration, and anchorage-independent colony formation. Our findings demonstrate a novel role for PTK7 in the tumorigenesis via generation of PTK7-CTF2 by sequential cleavage of ADAM17 and γ-secretase.