Binding of EphB receptors to ephrinB ligands on the surface of adjacent cells initiates signaling cascades that regulate angiogenesis, axonal guidance, and neuronal plasticity. These functions require processing of EphB receptors and removal of EphB-ephrinB complexes from the cell surface, but the mechanisms involved are poorly understood. Here we show that the ectodomain of EphB2 receptor is released to extracellular space following cleavage after EphB2 residue 543. The remaining membrane-associated fragment is cleaved by the presenilin-dependent γ-secretase activity after EphB2 residue 569 releasing an intracellular peptide that contains the cytoplasmic domain of EphB2. This cleavage is inhibited by presenilin 1 familial Alzheimer disease mutations. Processing of EphB2 receptor depends on specific treatments: ephrinB ligand-induced processing requires endocytosis, and the ectodomain cleavage is sensitive to peptide inhibitor N-benzyloxycarbonyl-Val-Leu-leucinal but insensitive to metalloproteinase inhibitor GM6001. The ligand-induced processing takes place in endosomes and involves the rapid degradation of the extracellular EphB2. EphrinB ligand stimulates ubiquitination of EphB2 receptor. Calcium influx- and N-methyl-D-aspartic acid-induced processing of EphB2 is inhibited by GM6001 and ADAM10 inhibitors but not by N-benzyloxycarbonyl-Val- Leu-leucinal. This processing requires no endocytosis and promotes rapid shedding of extracellular EphB2, indicating that it takes place at the plasma membrane. Our data identify novel cleavages and modifications of EphB2 receptor and indicate that specific conditions determine the proteolytic systems and subcellular sites involved in the processing of this receptor.