The proteolytic machinery comprising metalloproteases and γ-secretase, an intramembrane aspartyl protease involved in Alzheimer's disease, cleaves several substrates in addition to the extensively studied amyloid precursor protein. Some of these substrates, such as N-cadherin, are synaptic proteins involved in synapse remodeling and maintenance. Here we show, in rats and mice, that metalloproteases and γ-secretase are physiologic regulators of synapses. Both proteases are synaptic, with γ-secretase tethered at the synapse by δ-catenin, a synaptic scaffolding protein that also binds to N-cadherin and, through scaffolds, to AMPA receptor and a metalloprotease. Activity-dependent proteolysis by metalloproteases and γ-secretase takes place at both sides of the synapse, with the metalloprotease cleavage being NMDA receptor-dependent. This proteolysis decreases levels of synaptic proteins and diminishes synaptic transmission. Our results suggest that activity-dependent substrate cleavage by synaptic metalloproteases and γ-secretase modifies synaptic transmission, providing a novel form of synaptic autoregulation.