sACE (somatic angiotensin-converting enzyme) consists of two homologous, N and C domains, whereas the testis isoenzyme [tACE (testis ACE)] consists of a single C domain. Both isoenzymes are shed from the cell surface by a sheddase activity, although sACE is shed much less efficiently than tACE. We hypothesize that the N domain of sACE plays a regulatory role, by occluding a recognition motif on the C domain required for ectodomain shedding and by influencing the catalytic efficiency. To test this, we constructed two mutants: CNdom-ACE and CCdom-ACE. CNdom-ACE was shed less efficiently than sACE, whereas CCdom-ACE was shed as efficiently as tACE. Notably, cleavage occurred both within the stalk and the interdomain bridge in both mutants, suggesting that a sheddase recognition motif resides within the C domain and is capable of directly cleaving at both positions. Analysis of the catalytic properties of the mutants and comparison with sACE and tACE revealed that the k(cat) for sACE and CNdom-ACE was less than or equal to the sum of the kcat values for tACE and the N-domain, suggesting negative co-operativity, whereas the kcat value for the CCdom-ACE suggested positive co-operativity between the two domains. Taken together, the results provide support for (i) the existence of a sheddase recognition motif in the C domain and (ii) molecular flexibility of the N and C domains in sACE, resulting in occlusion of the C-domain recognition motif by the N domain as well as close contact of the two domains during hydrolysis of peptide substrates.