The chloride channel calcium-activated (CLCA) family are secreted proteins that regulate both chloride transport and mucin expression, thus controlling the production of mucus in respiratory and other systems. Accordingly, human CLCA1 is a critical mediator of hypersecretory lung diseases, such as asthma, chronic obstructive pulmonary disease, and cystic fibrosis, that manifest mucus obstruction. Despite relevance to homeostasis and disease, the mechanism of CLCA1 function remains largely undefined. We address this void by showing that CLCA proteins contain a consensus proteolytic cleavage site recognized by a novel zincin metalloprotease domain located within the N terminus of CLCA itself. CLCA1 mutations that inhibit self-cleavage prevent activation of calcium-activated chloride channel (CaCC)-mediated chloride transport. CaCC activation requires cleavage to unmask the N-terminal fragment of CLCA1, which can independently gate CaCCs. Gating of CaCCs mediated by CLCA1 does not appear to involve proteolytic cleavage of the channel because a mutant N-terminal fragment deficient in proteolytic activity is able to induce currents comparable with that of the native fragment. These data provide both a mechanistic basis for CLCA1 self-cleavage and a novel mechanism for regulation of chloride channel activity specific to the mucosal interface.