Tumor necrosis factor-alpha (TNFalpha) is a cytokine that induces protective inflammatory reactions and kills tumor cells but also causes severe damage when produced in excess, as in rheumatoid arthritis and septic shock. Soluble TNFalpha is released from its membrane-bound precursor by a membrane-anchored proteinase, recently identified as a multidomain metalloproteinase called TNFalpha-converting enzyme or TACE. We have cocrystallized the catalytic domain of TACE with a hydroxamic acid inhibitor and have solved its 2.0 A crystal structure. This structure reveals a polypeptide fold and a catalytic zinc environment resembling that of the snake venom metalloproteinases, identifying TACE as a member of the adamalysin/ADAM family. However, a number of large insertion loops generate unique surface features. The pro-TNFalpha cleavage site fits to the active site of TACE but seems also to be determined by its position relative to the base of the compact trimeric TNFalpha cone. The active-site cleft of TACE shares properties with the matrix metalloproteinases but exhibits unique features such as a deep S3' pocket merging with the S1' specificity pocket below the surface. The structure thus opens a different approach toward the design of specific synthetic TACE inhibitors, which could act as effective therapeutic agents in vivo to modulate TNFalpha-induced pathophysiological effects, and might also help to control related shedding processes.