Nogo-66 receptor 1 (NgR1) is a glycosylphosphatidylinositol-anchored receptor for myelin-associated inhibitors that restricts plasticity and axonal regrowth in the CNS. NgR1 is cleaved from the cell surface of SH-SY5Y neuroblastoma cells in a metalloproteinase-dependent manner; however, the mechanism and physiological consequence of NgR1 shedding have not been explored. We now demonstrate that NgR1 is shed from multiple populations of primary neurons. Through a loss-of-function approach, we found that membrane-type matrix metalloproteinase-3 (MT3-MMP) regulates endogenous NgR1 shedding in primary neurons. Neuronal knockdown of MT3-MMP resulted in the accumulation of NgR1 at the cell surface and reduced the accumulation of the NgR1 cleavage fragment in medium conditioned by cortical neurons. Recombinant MT1-, MT2-, MT3-, and MT5-MMPs promoted NgR1 shedding from the surface of primary neurons, and this treatment rendered neurons resistant to myelin-associated inhibitors. Introduction of a cleavage-resistant form of NgR1 reconstitutes the neuronal response to these inhibitors, demonstrating that specific metalloproteinases attenuate neuronal responses to myelin in an NgR1-dependent manner.