Analysis of vertebrate genome sequences at the turn of the millennium revealed that a vastly larger repertoire of enzymes execute proteolytic cleavage reactions within the pericellular and extracellular environments than was anticipated from biochemical and molecular analysis. Most unexpected was the unveiling of an entire new family of structurally unique multidomain serine proteases that are anchored directly to the plasma membrane. Unlike secreted serine proteases, which function primarily in tissue repair, immunity, and nutrient uptake, these membrane-anchored serine proteases regulate fundamental cellular and developmental processes, including tissue morphogenesis, epithelial barrier function, ion and water transport, cellular iron export, and fertilization. Here the cellular and developmental biology of this fascinating new group of proteases is reviewed. Particularly highlighted is how the study of membrane-anchored serine proteases has expanded our knowledge of the range of physiological processes that require regulated proteolysis at the cell surface.