Cadherins are critically involved in tissue development and tissue homeostasis. We demonstrate here that neuronal cadherin (N-cadherin) is cleaved specifically by the disintegrin and metalloproteinase ADAM10 in its ectodomain. ADAM10 is not only responsible for the constitutive, but also for the regulated, shedding of this adhesion molecule in fibroblasts and neuronal cells directly regulating the overall levels of N-cadherin expression at the cell surface. The ADAM10-induced N-cadherin cleavage resulted in changes in the adhesive behaviour of cells and also in a dramatic redistribution of beta-catenin from the cell surface to the cytoplasmic pool, thereby influencing the expression of beta-catenin target genes. Our data therefore demonstrate a crucial role of ADAM10 in the regulation of cell-cell adhesion and on beta-catenin signalling, leading to the conclusion that this protease constitutes a central switch in the signalling pathway from N-cadherin at the cell surface to beta-catenin/LEF-1-regulated gene expression in the nucleus.