CD44 is the major adhesion molecule for the extracellular matrix components and is implicated in a wide variety of physiological and pathological processes including the regulation of tumor cell growth and metastasis. Our previous studies have shown that CD44 undergoes sequential proteolytic cleavages in the extracellular and transmembrane domains and the cleavage product derived from CD44 intramembranous cleavage acts as a signal transduction molecule. However, the underlying mechanism of the intramembranous cleavage of CD44 remains to be elucidated. In the present study, we report for the first time that CD44 is a substrate of the presenilin (PS)-dependent gamma-secretase. We demonstrate that the intramembranous cleavage of CD44 induced by 12-O-tetradecanoylphorbol 13-acetate (TPA) treatment or mechanical scraping is blocked by gamma-secretase inhibitors in U251MG cells and that this cleavage is also inhibited in PS-deficient mouse embryonic fibroblasts. Furthermore, we showed that PS1 is redistributed to ruffling areas of the plasma membrane similarly to CD44 after TPA treatment, supporting our biochemical observation that PS1 is involved in the intramembranous cleavage of CD44. Our present findings suggest important implications for understanding CD44-dependent signal transduction and a potential role of PS/gamma-secretase activity in the functional regulation of adhesion molecules.