EGF family growth factors, including transforming growth factor-alpha (TGFalpha), amphiregulin (AR), and heparin-binding EGF (HB-EGF), are invariably expressed as transmembrane precursors that are cleaved at one or more sites in the extracellular domain to release soluble growth factor. Considerable attention has focused on the identification of proteases responsible for these processing events. We previously implicated tumor necrosis factor-alpha converting enzyme (TACE/ADAM17) in the generation of soluble TGFalpha from its transmembrane precursor, proTGFalpha. Here, we review our findings that primary keratinocytes from Tace(deltaZn/deltaZn) mice, which express a nonfunctional TACE, released dramatically lower levels of soluble TGFalpha compared to their normal counterparts, even though TGFalpha mRNA and cell-associated protein levels were similar in the two cell populations. Restoration of TACE activity in Tace(deltaZn/deltaZn) cells increased shedding of TGFalpha species, including the mature, 6-kDa protein. Further, exogenous TACE enzyme accurately cleaved the N-terminal processing site of proTGFalpha in cell lysates, as well as both physiologic sites of a soluble proTGFalpha ectodomain. TACE also accurately cleaved peptide substrates corresponding to the processing sites of several additional EGF family members, and restoration of TACE activity enhanced the shedding of soluble AR and HB-EGF proteins from Tace(deltaZn/deltaZn) cells. Finally, reduction of functional TACE gene dosage greatly exacerbated the open-eye defect of Egfr(wa-2/wa-2) newborns, which is regulated by redundant actions of several EGF family ligands. The implications of these results for the biology of the EGF family and TACE are discussed.