Lipoprotein lipase (LPL)-mediated lipolysis of triglycerides is the first and rate-limiting step in chylomicron/very low density lipoprotein clearance at the luminal surface of the capillaries. Angiopoietin-like protein 3 (ANGPTL3) is shown to inhibit LPL activity and plays important roles in modulating lipoprotein metabolism in vivo. However, the mechanism by which it inhibits LPL activity remains poorly understood. Using cell-based analysis of the interaction between ANGPTL3, furin, proprotein convertase subtilisin/kexin type 5 (PCSK5), paired amino acid converting enzyme-4 (PACE4), and LPL, we demonstrated that the cleavage of LPL by proprotein convertases is an inactivation process, similar to that seen for endothelial lipase cleavage. At physiological concentrations and in the presence of cells, ANGPTL3 is a potent inhibitor of LPL. This action is due to the fact that ANGPTL3 can enhance LPL cleavage by endogenous furin and PACE4 but not by PCSK5. This effect is specific to LPL but not endothelial lipase. Both N- and C-terminal domains of LPL are required for ANGPTL3-enhanced cleavage, and the N-terminal domain of ANGPTL3 is sufficient to exert its effect on LPL cleavage. Moreover, ANGPTL3 enhances LPL cleavage in the presence of either heparan sulfate proteoglycans or glycosylphosphatidylinositol-anchored high density lipoprotein-binding protein 1 (GPIHBP1). By enhancing LPL cleavage, ANGPTL3 dissociates LPL from the cell surface, inhibiting both the catalytic and noncatalytic functions of LPL. Taken together, our data provide a molecular connection between ANGPTL3, LPL, and proprotein convertases, which may represent a rapid signal communication among different metabolically active tissues to maintain energy homeostasis. These novel findings provide a new paradigm of specific protease-substrate interaction and further improve our knowledge of LPL biology.