Although GSK-3 activity can be regulated by phosphorylation and through interaction with GSK-3-binding proteins, here we describe N-terminal proteolysis as a novel way to regulate GSK-3. When brain extracts were exposed to calcium, GSK-3 was truncated, generating two fragments of approximately 40 and 30 kDa, a proteolytic process that was inhibited by specific calpain inhibitors. Interestingly, instead of inhibiting this enzyme, GSK-3 truncation augmented its kinase activity. When we digested recombinant GSK-3 alpha and GSK-3beta protein with calpain, each isoform was cleaved differently, yet the truncated GSK-3 isoforms were still active kinases. We also found that lithium, a GSK-3 inhibitor, inhibits full-length and cleaved GSK-3 isoforms with the same IC(50) value. Calpain removed the N-terminal ends of His-tagged GSK-3 isoenzymes, and exposing cultured cortical neurons with ionomycin, glutamate, or N-methyl-d-aspartate led to the truncation of GSK-3. This truncation was blocked by the calpain inhibitor calpeptin, at the same concentration at which it inhibits calpain-mediated cleavage of NMDAR-2B and of p35 (the regulatory subunit of CDK5). Together, our data demonstrate that calpain activation produces a truncation of GSK-3 that removes an N-terminal inhibitory domain. Furthermore, we show that GSK-3 alpha and GSK-3beta isoenzymes have a different susceptibility to this cleavage, suggesting a means to specifically regulate these isoenzymes. These data provide the first direct evidence that calpain promotes GSK-3 truncation in a way that has implications in signal transduction, and probably in pathological disorders such as Alzheimer disease.