The 80-kDa TNFR (TNFR80) expressed by activated human T cells is constitutively phosphorylated and undergoes limited proteolytic cleavage (shedding) at the cell surface releasing a 40-kDa soluble TNF-binding protein. Triggering of activated T cells through the TCR rapidly increased the rate of TNFR80 shedding > 20-fold more than nonstimulated cells, demonstrating that shedding is a specific, inducible process. The protein kinase inhibitor staurosporine inhibited constitutive phosphorylation and blocked inducible shedding of TNFR80, suggesting that phosphorylation may be important for cleavage of the extracellular domain. However, a deletion mutation of the entire cytoplasmic domain of human TNFR80 was shed when expressed in murine L929 cells, albeit relatively poorly compared with full length receptor. This demonstrates that the cytoplasmic domain is important but not essential for cleavage of the extracellular domain of TNFR80. Moreover, a requirement for phosphorylation of proteins other than the receptor was revealed by the finding that staurosporine completely blocked cleavage of the cytoplasmic deletion mutant. Collectively, these results demonstrate that protein phosphorylation is essential and the cytoplasmic domain is important for regulating the inducible production of soluble TNF-binding proteins by activated effector T cells.