Neural cell adhesion molecule (NCAM), a membrane-associated glycoprotein and its polysialylated form (PSA-NCAM) play an important role in brain plasticity via regulating cell-cell interactions. Here, we demonstrate that the cytosolic serine protease prolyl endopeptidase (PREP) is able to regulate NCAM and PSA-NCAM. Using SH-SY5Y neuroblastoma cell line with stable overexpression of PREP we found a remarkable loss in PSA-NCAM and reduced levels of NCAM 180 kDa and NCAM 140 kDa protein species and a significant increase in the NCAM immunoreactive band migrating at an apparent molecular weight of 120 kDa in PREP-overexpressing cells. Moreover, increased levels of NCAM fragments in the concentrated medium derived from PREP-overexpressing cells were found. PREP overexpression selectively induced an activation of matrix metalloproteinase-9 (MMP-9), which could be involved in the observed degradation of NCAM, as MMP-9 neutralization reduced the levels of NCAM fragments in cell culture medium. We propose that increased PREP levels promote epidermal growth factor (EGF)-receptor signaling, which in turn activates MMP-9. In conclusion, our findings provide evidence for the novel roles for PREP in mechanisms regulating cellular plasticity via NCAM and PSA-NCAM.