MLK3 (mixed lineage kinase 3) is a MAP3K [MAPK (mitogen-activated protein kinase) kinase kinase] that activates multiple MAPK pathways, including the JNK (c-Jun N-terminal kinase) pathway. Immunoblotting of lysates from cells ectopically expressing active MLK3 revealed an additional immunoreactive band corresponding to a CTF (C-terminal fragment) of MLK3. In the present paper we provide evidence that MLK3 undergoes proteolysis to generate a stable CTF in response to different stimuli, including PMA and TNFα (tumour necrosis factor α). The cleavage site was deduced by Edman sequencing as between Gln251 and Pro252, which is within the kinase domain of MLK3. Based on our homology model of the kinase domain of MLK3, the region containing the cleavage site is predicted to reside on a flexible solvent-accessible loop. Site-directed mutagenesis studies revealed that Leu250 and Gln251 are required for recognition by the ‘MLK3 protease’, reminiscent of the substrate specificity of the coronavirus 3C and 3CL proteases. Whereas numerous mammalian protease inhibitors have no effect on MLK3 proteolysis, blockade of the proteasome through epoxomicin or MG132 abolishes PMA-induced production of the CTF of MLK3. This CTF is able to heterodimerize with full-length MLK3, and interact with the active form of the small GTPase Cdc42, resulting in diminished activation loop phosphorylation of MLK3 and reduced signalling to JNK. Thus this novel proteolytic processing of MLK3 may negatively control MLK3 signalling to JNK.