Two genes encode the CD16 low affinity IgG FcR. CD16-I (Fc gamma RIII-1) is expressed on PMN as a phosphatidylinositol-glycan anchored glycoprotein. CD16-II (Fc gamma RIII-2) is expressed on NK cells and macrophages as a transmembrane glycoprotein associated with CD3 zeta or Fc epsilon RI-gamma. NK cells spontaneously release soluble CD16-II from the cell surface and this is enhanced by activation with phorbol ester. In this study, we demonstrate that a metalloprotease is involved in the spontaneous and PMA-induced release of CD16-II from NK cells. 1,10-phenanthroline, an inhibitor of Zn(2+)-dependent metalloproteases, efficiently inhibits CD16-II release. 1,7-phenanthroline, an inactive analogue that doesn't chelate Zn2+ or other divalent metal cations, and inhibitors of serine proteases do not affect spontaneous or PMA-induced release of CD16-II. Murine P815 mastocytoma cells transfected with human CD16-II cDNA shed membrane CD16, and 1,10-phenanthroline inhibits this process. P815 transfectants expressing CD16-II molecules with truncated cytoplasmic domains also release soluble receptors, indicating that the cytoplasmic segment of CD16-II is not required for interaction with the protease or the cytoskeleton. By contrast, 1,10-phenanthroline does not inhibit PMA-induced release of CD16-I glycoprotein from PMN, indicating a different mechanism of release for this phosphatidylinositol-glycan anchored molecule. Prior studies have demonstrated that NK cells are activated via the inositol phosphate pathway after engagement of CD16-II by immune complexes or Ig-coated tumor cell targets. A membrane metalloprotease with substrate specificity for CD16-II that is activated by PKC stimulation may provide a mechanism for releasing the immune complex or target from the effector cells and halting signal transduction.