Matrix metalloproteinases (MMPs) are a family of enzymes that are typically released from intracellular stores to act on specific extracellular substrates. MMP expression and activity can be increased in a neuronal activity-dependent manner, and further increased in response to tissue injury. MMP substrates include cell adhesion molecules (CAMs) that are abundantly expressed in the brain and well positioned for membrane proximal cleavage. Importantly, CAM integrity is important to synaptic structure and axon-myelin interactions, and shed ectodomains may themselves influence cellular function. In the present study, we have examined proteolysis of N-cadherin (N-cdh) by MMP-7, a family member that has been implicated in disorders including HIV dementia, multiple sclerosis, and major depression. With in vitro digest assays, we tested N-cdh cleavage by increasing concentrations of recombinant enzyme. We also tested MMP-7 for its potential to stimulate N-cdh shedding from cultured neural cells. Since select CAM ectodomains may interact with cell surface receptors that are expressed on microglial cells, we subsequently tested the N-cdh ectodomain for its ability to stimulate activation of this cell type as determined by nuclear translocation of NF-κB, Iba-1 expression, and TNF-α release. We observed that soluble N-cdh increased Iba-1 levels in microglial lysates, and also increased microglial release of the cytokine TNF-α. Effects were associated with increased NF-κB immunoreactivity in microglial nuclei and diminished by an inhibitor of the toll-like receptor adaptor protein, MyD88. Together, these in vitro results suggest that soluble N-cdh may represent a novel effector of microglial activation, and that disorders with increased MMP levels may stimulate a cycle in which the products of excess proteolysis further exacerbate microglial-mediated tissue injury. Additional in vivo studies are warranted to address this issue.