Tumor necrosis factor receptors (TNFR) are differentially regulated in human rejecting renal transplants. The TNF-α converting enzyme (TACE) regulates the membrane shedding of both receptors and TNF itself. We analyzed the expression and regulation of TACE in human rejecting renal transplants. Samples from normal renal tissue or renal transplant undergoing severe acute rejection were immunostained for TACE using antibodies from different species. Human kidney epithelial cells were cultured and TACE plasmid was transfected to upregulate TACE expression. Cells were fractionated and immunoblotted for TACE, and ELISA was performed to test soluble TNFR2. We showed that TACE was upregulated mainly in tubular epithelial cells in acute rejecting kidney, where it colocalized with TNFR2. Epithelial cells with increased levels of TACE shed more soluble TNFR2 into culture media and even more after TACE activation by phorbol-12-myristate-13-acetate stimulation. The shedding could be completely blocked by the TACE inhibitor TNF-α protease inhibitor. Upregulation of TACE in epithelial cells in acute rejecting kidney could lead to more TNFR2 shedding and, hence, antagonize the proinflammatory effect of local TNF.