Limited proteolysis, accomplished by endopeptidases, is a ubiquitous phenomenon underlying the regulation and activation of many enzymes, receptors, and other proteins synthesized as inactive precursors. Serine proteases make up one of the largest and most conserved families of endopeptidases involved in diverse cellular activities, including wound healing, blood coagulation, and immune responses. Heteromeric α,β,γ-epithelial sodium channels (ENaC) associated with diseases like cystic fibrosis and Liddle's syndrome are irreversibly stimulated by membrane-anchored proteases (MAPs) and furin-like convertases. Matriptase/channel activating protease-3 (CAP3) is one of the several MAPs that potently activate ENaC. Despite identification of protease cleavage sites, the basis for the enhanced susceptibility of α- and γ-ENaC to proteases remains elusive. Here, we elucidate the energetic and structural bases for activation of ENaC by CAP3. We find a region near the γ-ENaC furin site that has previously not been identified as a critical cleavage site for CAP3-mediated stimulation. We also report that CAP3 mediates cleavage of ENaC at basic residues downstream of the furin site. Our results indicate that surface proteases alone are sufficient to fully activate uncleaved ENaC and explain how ENaC in epithelia expressing surface-active proteases can appear refractory to soluble proteases. Our results support a model in which proteases prime ENaC for activation by cleaving at the furin site, and cleavage at downstream sites is accomplished by membrane surface proteases or extracellular soluble proteases. On the basis of our results, we propose a dynamics-driven "anglerfish" mechanism that explains less stringent sequence requirements for substrate recognition and cleavage by matriptase than by furin.