Tumor necrosis factor (TNF) family members are initially synthesized as type II transmembrane proteins, but some of these proteins are substrates for proteolytic enzymes that generate soluble cytokines with biological activity. TWEAK (TNF-like weak inducer of apoptosis), a member of the TNF family, is a multifunctional cytokine that acts via binding to a cell surface receptor named Fn14 (fibroblast growth factor-inducible 14). Studies conducted to date indicate that TWEAK-producing cells can co-express both membrane-anchored and soluble TWEAK isoforms, but there is little information on TWEAK proteolytic processing. Also, it is presently unclear whether membrane-anchored TWEAK, like soluble TWEAK, is biologically active. Here we show that full-length human TWEAK is processed intracellularly by the serine protease furin and identify TWEAK amino acid residues 90-93 as the predominant furin recognition site. In addition, we report that full-length, membrane-anchored TWEAK can bind the Fn14 receptor on neighboring cells and activate the NF-kappaB signaling pathway. Thus, TWEAK can act in a juxtacrine manner to initiate cellular responses, and this property may be important for TWEAK function during physiological wound repair and disease pathogenesis.