The signal peptide peptidase (SPP) is an intramembrane-cleaving aspartyl protease that acts on type II transmembrane proteins. SPP substrates include signal peptides after they have been cleaved from a preprotein, hence the name. The known SPP isoform, which we renamed SPPalpha, contains an endoplasmic reticulum retention signal at the carboxy terminus. We found a new splice variant, SPPbeta, with an additional in-frame exon inserted between exons 11 and 12 of SPPalpha. Insertion of the new exon led to a complete change in the amino-acid sequence of the carboxy tail. A stop codon within this new exon resulted in silencing of exon 12 and eliminated the endoplasmic reticulum retention signal. The new SPP isoform predominantly localised to the cell surface in contrast to the more restricted localisation of SPPalpha in the endoplasmic reticulum. Differential expression in mouse tissues and in subcellular compartments suggests new functions for SPP in addition to cleaving signal peptides.