Membrane protein shedding is a critical step in many normal and pathological processes. The anti-aging protein klotho (KL), mainly expressed in kidney and brain, is secreted into the serum and CSF, respectively. KL is proteolytically released, or shed, from the cell surface by ADAM10 and ADAM17, which are the α-secretases that also cleave the amyloid precursor protein and other proteins. The transmembrane KL is a coreceptor with the FGF receptor for FGF23, whereas the shed form acts as a circulating hormone. However, the precise cleavage sites in KL are unknown. KL contains two major cleavage sites: one close to the juxtamembrane region and another between the KL1 and KL2 domains. We identified the cleavage site involved in KL release by mutating potential sheddase(s) recognition sequences and examining the production of the KL extracellular fragments in transfected COS-7 cells. Deletion of amino acids T958 and L959 results in a 50-60% reduction in KL shedding, and an additional P954E mutation results in further reduction of KL shedding by 70-80%. Deletion of amino acids 954-962 resulted in a 94% reduction in KL shedding. This mutant also had moderately decreased cell surface expression, yet had overall similar subcellular localization as that of WT KL, as demonstrated by immunofluorescence. Cleavage-resistant mutants could function as a FGFR coreceptor for FGF23, but they lost activity as a soluble form of KL in proliferation and transcriptional reporter assays. Cleavage between the KL1 and KL2 domains is dependent on juxtamembrane cleavage. Our results shed light onto mechanisms underlying KL release from the cell membrane and provide a target for potential pharmacologic interventions aimed at regulating KL secretion.