The urokinase-type plasminogen activator (uPA) binds to a specific cell-surface receptor, uPAR. On several cell types uPAR is present both in the full-length form and a cleaved form, uPAR(2+3), which is devoid of binding activity. The formation of uPAR(2+3) on cultured U937 cells is either directly or indirectly mediated by uPA itself. In a soluble system, uPA can cleave purified uPAR, but the low efficiency of this reaction has raised doubts as to whether uPA is directly responsible for uPAR cleavage on the cells. We now report that uPA-catalyzed cleavage of uPAR on the cell surface is strongly favored relative to the reaction in solution. The time course of uPA-catalyzed cleavage of cell-bound uPAR was studied using U937 cells stimulated with phorbol 12-myristate 13-acetate. Only 30 min was required for 10 nM uPA to cleave 50% of the cell-bound uPAR. This uPA-catalyzed cleavage reaction was inhibited by a prior incubation of the cells with uPA inactivated by diisopropyl fluorophosphate, demonstrating a requirement for specific receptor binding of the active uPA to obtain the high-efficiency cleavage of cell-bound uPAR. Furthermore, amino-terminal sequence analysis revealed that uPAR(2+3), purified from U937 cell lysates, had the same amino termini as uPAR(2+3), generated by uPA in a purified system. In both cases cleavage had occurred at two positions in the hinge region connecting domain 1 and 2, between Arg83-Ala84 and Arg89-Ser90, respectively. The uPA-catalyzed cleavage of uPAR is a new negative-feedback regulation mechanism for cell-surface plasminogen activation. We propose that this mechanism plays a physiological role at specific sites with high local concentrations of uPA, thus adding another step to the complex regulation of this cascade reaction.