Ectodomain shedding mediated by tumor necrosis factor-α (TNF-α)-converting enzyme [TACE; also known as ADAM17 (a disintegrin and metalloproteinase 17)] provides an important switch in regulating cell proliferation, inflammation, and cancer progression. TACE-mediated ectodomain cleavage is activated by signaling of the mitogen-activated protein kinases (MAPKs) p38 and ERK (extracellular signal-regulated kinase). Here, we found that under basal conditions, TACE was predominantly present as dimers at the cell surface, which required its cytoplasmic domain and enabled efficient association with tissue inhibitor of metalloproteinase-3 (TIMP3) and silencing of TACE activity. Upon activation of the ERK or p38 MAPK pathway, the balance shifted from TACE dimers to monomers, and this shift was associated with increased cell surface presentation of TACE and decreased TIMP3 association, which relieved the inhibition of TACE by TIMP3 and increased TACE-mediated proteolysis of transforming growth factor-α. Thus, cell signaling altered the dimer-monomer equilibrium and inhibitor association to promote activation of TACE-mediated ectodomain shedding, a regulatory mechanism that may extend to other ADAM proteases.