Sphingomyelin (SM) hydrolysis in the gut has implications in colonic tumorigenesis and cholesterol absorption. It is triggered by intestinal alkaline sphingomyelinase (Alk-SMase) that is present in the intestinal mucosa and content. The mechanism by which the enzyme is released into the lumen is not clear. We studied whether trypsin can dissociate Alk-SMase from the mucosa and affect its activity. During luminal perfusion of rat intestine, addition of trypsin to the buffer increased Alk-SMase activity in the perfusate output by about threefold. Treating COS-7 cells transfected with Alk-SMase cDNA with trypsin increased the SMase activity in the medium and reduced that in the cell lysate dose dependently. The appearance of Alk-SMase in the perfusate and culture medium was confirmed by Western blot analysis. The effect of trypsin was blocked by trypsin inhibitor, and neither chymotrypsin nor elastase had a similar effect. We also expressed the full length and COOH-terminal truncated Alk-SMase in COS-7 cells and found that the activity of the full-length enzyme is mainly in the cells, whereas that of the truncated form is mainly in the medium. Both forms were active, but only the activity of the full-length Alk-SMase was enhanced by trypsin. By linking a poly-His tag to the constructed cDNA, we found that the first tryptic site Arg440 upstream of the signal anchor was attacked by trypsin. In conclusion, trypsin cleaves the Alk-SMase at the COOH terminal, releases it from mucosa, and meanwhile enhances its activity. The findings indicate a physiological role of trypsin in SM digestion.