C‐type lectin family 14, member A (CLEC14A), is a single‐pass transmembrane glycoprotein that is overexpressed in tumor endothelial cells, and it promotes sprouting angiogenesis and modulates endothelial function via interactions with extracellular matrix proteins. Here, we show that CLEC14A is cleaved by rhomboid‐like protein 2 (RHBDL2), one of 3 catalytic mammalian rhomboid‐like (RHBDL) proteases, but that it is not cleaved by RHBDL1 or ‐3. Site‐directed mutagenesis identified the precise site at which RHBDL2 cleaves CLEC14A, and targeted, small interfering RNAs that knockdown endogenous CLEC14A and RHBDL2 in human endothelial cells validated the specificity of CLEC14A shedding by RHBDL2. Loss of endogenous cleaved CLEC14A increased endothelial migration 2‐fold, whereas that addition of recombinant cleaved CLEC14A inhibited the sprouting of human and murine endothelial cells 3‐fold in several in vitro models. We assessed the in vivo role of cleaved CLEC14A in angiogenesis by using the rodent subcutaneous sponge implant model, and we found that CLEC14A protein inhibited vascular density by >;50%. Finally, we show that cleaved CLEC14A binds to sprouting endothelial tip cells. Our data show that the ectodomain of CLEC14A regulates sprouting angiogenesis and suggests a role for RHBDL2 in endothelial function.—Noy, P. J., Swain, R. K., Khan, K., Lodhia, P., Bicknell, R. Sprouting angiogenesis is regulated by shedding of the C‐type lectin family 14, member A (CLEC14A) ectodomain, catalyzed by rhomboid‐like 2 protein (RHBDL2). FASEB J. 30, 2311–2323 (2016). www.fasebj.org