The low density lipoprotein receptor related protein 1B (LRP1B) is a large endocytic receptor that was first identified as a candidate tumor suppressor gene. In the current investigation we demonstrate that LRP1B undergoes regulated intramembrane proteolysis in a gamma-secretase-dependent process. The released intracellular domain (ICD) then translocates to the nucleus via a nuclear localization signal that is present within this domain. ICD release first requires shedding of the LRP1B ectodomain, which appears to be catalyzed by a member of the metalloproteinase family. Employing site-directed mutagenesis studies, we identified lysine residues 4432 and 4435 and arginine 4442 as key amino acids important for ectodomain shedding of LRP1B. We also demonstrate that an LRP1B minireceptor as well as the ICD domain alone suppresses anchorage-independent growth of LRP1B-deficient neuroglioma cells (H4 cells). Interestingly, abrogating ectodomain shedding resulted in a loss of the ability of LRP1B minireceptors to suppress anchorage-independent growth. Together, these studies reveal that LRP1B has tumor suppression function that is mediated by proteolytic processing of the receptor resulting in ICD release.