CD14, expressed on the surface of monocytes as a phospholipid-linked protein, is a receptor for serum LPS binding protein/LPS complex. It was specifically down-modulated after stimulation of monocytes by physiologic activating/differentiating agents such as bacterial LPS and IFN-gamma, by the pharmacologic agents PMA and calcium ionophore A23187, and by anti-CD14 antibodies. The down-modulation was almost totally blocked at 4 degrees C or at pH 4.5 and markedly inhibited by the protease inhibitors diisopropylfluorophosphate and PMSF. A soluble labeled CD14 was isolated from culture supernatant of surface iodinated monocytes after their activation, indicating that CD14 is shed from the cell surface rather than internalized. The size of the soluble CD14 shed from the monocytes in vitro was smaller than that of either the membrane-bound form or a soluble CD14 cleaved from the cell surface by phosphatidyl inositol-specific phospholipase C, but identical to the size of one of the two major soluble CD14 forms normally found in human serum. These data suggest that CD14 shedding induced by monocyte stimulation may play an important role in the regulation of surface CD14 expression.