The glycosylphosphatidylinositol (GPI)-anchored protein cluster of differentiation 109 (CD109) is expressed on many human cell types and modulates the transforming growth factor β (TGF-β) signaling network. CD109 belongs to the alpha-macroglobulin family of proteins, known for their protease-triggered conformational changes. However, the effect of proteolysis on CD109 and its conformation are unknown. Here, we investigated the interactions of CD109 with proteases. We found that a diverse selection of proteases cleaved peptide bonds within the predicted bait region of CD109, inducing a conformational change that activated the thiol ester of CD109. We show CD109 was able to conjugate proteases with this thiol ester and decrease their activity toward protein substrates, demonstrating that CD109 is a protease inhibitor. We additionally found that CD109 has a unique mechanism whereby its GPI-anchored macroglobulin 8 (MG8) domain dissociates during its conformational change, allowing proteases to release CD109 from the cell surface by a precise mechanism and not unspecific shedding. We conclude that proteolysis of the CD109 bait region affects both its structure and location, and that interactions between CD109 and proteases may be important to understanding its functions, for example, as a TGF-β co-receptor.