We recently identified X-linked ectodermal dysplasia receptor (XEDAR, also known as TNFRSF27 or EDA2R) as a direct p53 target that was frequently downregulated in colorectal cancer tissues due to its epigenetic alterations or through the p53 gene mutations. However, the role of the posttranslational regulation of XEDAR protein in colorectal carcinogenesis was not well clarified thus far. Here, we report that the extracellular NH(2) terminus of XEDAR protein was cleaved by a metalloproteinase and released into culture media. The remaining COOH-terminal membrane-anchored fragment was rapidly degraded through the ubiquitin-proteasome pathway. Interestingly, ectopic p53 expression also transactivated an XEDAR ligand, EDA-A2, together with XEDAR. Moreover, EDA-A2 blocked the cleavage of XEDAR and subsequently inhibited cell growth. We also found a missense mutation of the XEDAR gene in NCI-H716 colorectal cancer cells, which caused the translocation of XEDAR protein from cell membrane to cytoplasm. This mutation attenuated the growth-suppressive effect of XEDAR, indicating that membrane localization is critical for physiologic XEDAR function. Thus, our findings clearly revealed the crucial role of EDA-A2/XEDAR interaction in the p53-signaling pathway.