Tumor necrosis factor alpha converting enzyme (TACE) is a sheddase overexpressed in cancers that generates cancer cell growth and survival factors, and is implicated in carcinogenesis and tumor growth. This indicates that TACE could be a potentially important cancer biomarker. Unexpectedly, TACE expression in cancer tissues does not correlate with cancer stage or invasiveness. Although TACE sheddase activity is a more direct and potentially better indicator of TACE biology and might be a better cancer biomarker than TACE expression, it has not been studied in cancer tissues. In the present study, we developed a reliable specific assay for quantification of TACE sheddase activity, investigated TACE activity and TACE protein expression in head and neck cancer (HNC) tissues, and examined the correlation of the results with HNC clinical stages and likelihood to recur. We found that HNC cell lines and tissues contained remarkably higher quantities of TACE activity and TACE protein than normal keratinocytes or oral mucosa. siRNA silencing of TACE resulted in the inhibition of release of the tumorogenic factors amphiregulin and transforming growth factor alpha, and tumor protective factors tumor necrosis factor receptors from HNC cells. Importantly, TACE activity, but not TACE protein expression, was significantly higher in large, T3/T4, primary tumors relative to small, T1/T2, primary tumors, and especially in primary tumors likely to recur relative to those unlikely to recur. These data show that increased TACE activity in cancer is biologically and clinically relevant, and indicate that TACE activity could be a significant biomarker of cancer prognosis.