Reelin, the protein defective in reeler mutant mice, plays a key role during brain development. Reelin is processed proteolytically at two sites, and the central fragment mimics function in vitro. Here, we show that processing is functionally important in vivo, a question that could not be addressed in our previous study. New monoclonal antibodies directed against central Reelin block its binding to lipoprotein receptors and perturb cortical development in vitro, confirming the importance of the central fragment that is detected in tissue and body fluids. Processing occurs when Reelin is incubated with embryonic neurons in culture or with their supernatant, but inhibition of processing by a metalloproteinase blocker does not prevent Reelin signaling in neurons. Furthermore, neurons internalize similarly full-length or central Reelin. In contrast, inhibition of processing prevents signaling and perturbs cortical development in cultured embryonic brain slices. Moreover, in vivo, the concentration of central Reelin is dramatically and selectively increased in receptor-deficient tissue, suggesting its specific downregulation after binding to receptors and internalization. We propose that processing by end-migration neurons is required in tissue (where Reelin is likely anchored to the extracellular matrix) to release the central fragment that diffuses locally and signals to target cells, whereas, in vitro, all Reelin forms have indiscriminate access to cells, so that cleavage is not necessary for signaling.