Soluble Fas ligand (sFasL) is released from the cell surface by matrix metalloproteinases (MMPs), one of which is MMP-7. We have reported that MMP-7-generated sFasL is pro-apoptotic in both in vitro and in vivo systems. However, there are contradictory reports that the soluble form of FasL is inactive or anti-apoptotic, resulting in significant controversy in the literature. One potential explanation for these discrepancies is that forms of sFasL with different amino-terminal sequences have been demonstrated to have varying activities. Here we report that MMP-7 cleaves murine and human FasL at sites that are distinct from previously reported cleavage sites resulting in production of novel forms of sFasL. Cleavage of FasL by MMP-7 occurs at the leucine residues in the sequence "ELAELR" within the region between the transmembrane and trimerization domains. When this site is unavailable, a more c-terminal site, "SL," is cleaved. MMP-7 differentially processes murine and human FasL since it cleaves human FasL not only at the "ELAELR" site but also at a previously identified site. Additionally, MMP-3, but not MMP-2, was found to have the same cleavage specificity for murine FasL as MMP-7. We conclude that the controversy regarding the biological activity of sFasL may be explained, in part, by the generation of distinct forms of sFasL as a result of cleavage at specific sequences.