Luman is a human basic leucine zipper transcription factor that, like the herpes simplex virus transcription factor VP16, requires the host cell factor, HCF, for activity. Although both HCF and Luman have been implicated in cell growth, their biological roles have not been clearly defined. Luman conforms to a type II membrane-associated glycoprotein with its carboxyl terminus embedded in cellular membranes and its amino terminus, which contains all its identified functional domains, in the cytoplasm. Here we show that Luman is processed by regulated intramembrane proteolysis (RIP). The site 1 protease (S1P), a Golgi apparatus-resident enzyme responsible for catalyzing the first step in the RIP pathway of the sterol regulatory element binding proteins (SREBPs) and ATF6, may also be involved in the processing of Luman. Thus, processing of Luman was highly stimulated by brefeldin A, a compound that causes the reflux of Golgi apparatus enzymes to the endoplasmic reticulum (ER). In addition, coexpression of Luman with S1P containing a KDEL ER retrieval signal resulted in virtually quantitative cleavage of Luman in the absence of any treatment. Finally, Luman contains a sequence, RQLR, immediately downstream from the transmembrane domain which bears similarity to the consensus S1P cleavage site identified by others. Substitution of arginine residues within this motif abolished S1P cleavage, providing robust evidence that S1P is involved in Luman processing. We observed that following S1P cleavage, the majority of the cleaved Luman was retained in cytoplasmic membranes, indicating that an additional step or enzymes yet to be identified are involved in complete cleavage and release to yield the product which ultimately enters the nuclei of cells.