Epithelial sodium channels (ENaCs) perform diverse physiological roles by mediating [Na.sup.+] absorption across epithelial surfaces throughout the body. Excessive [Na.sup.+] absorption in kidney and colon elevates blood pressure and in the airways disrupts mucociliary clearance. Potential therapies for disorders of [Na.sup.+] absorption require better understanding of ENaC regulation. Recent work has established partial and selective proteolysis of ENaCs as an important means of channel activation. In particular, channel-activating transmembrane serine proteases (CAPs) and cognate inhibitors may be important in tissue-specific regulation of ENaCs. Although CAP2 (TMPRSS4) requires catalytic activity to activate ENaCs, there is not yet evidence of ENaC fragments produced by this serine protease and/or identification of the site (s) where CAP2 cleaves ENaCs. Here, we report that CAP2 cleaves at multiple sites in all three ENaC subunits, including cleavage at a conserved basic residue located in the vicinity of the degenerin site ([alpha]-K561, [beta]-R503, and [gamma]-R515). Sites in [alpha]-ENaC at K149/R164/K169/R177 and furin-consensus sites in [alpha]-ENaC (R205/R231) and [gamma]-ENaC (R138) are responsible for ENaC fragments observed in oocytes coexpressing CAP2. However, the only one of these demonstrated cleavage events that is relevant for the channel activation by CAP2 takes place in [gamma]-ENaC at position R138, the previously identified furin-consensus cleavage site. Replacement of arginine by alanine or glutamine ([alpha],[beta],[gamma]R138A/Q) completely abolished both the [Na.sup.+] current ([I.sub.Na]) and a 75-kD [gamma]-ENaC fragment at the cell surface stimulated by CAP2. Replacement of [gamma]-ENaC R138 with a conserved basic residue, lysine, preserved both the CAp2-induced [I.sub.Na] and the 75-kD [gamma]-ENaC fragment. These data strongly support a model where CAP2 activates ENaCs by cleaving at R138 in [gamma]-ENaC.