The urokinase receptor (uPAR) is a glycosylphosphatidylinositol (GPI)-anchored protein that promotes tissue remodeling, tumor cell adhesion, migration and invasion. uPAR mediates degradation of the extracellular matrix through protease recruitment and enhances cell adhesion, migration and signaling through vitronectin binding and interactions with integrins and other receptors. Full-length uPAR is released from the cell surface, but the mechanism and functional significance of uPAR release remain obscure. Here we show that transmembrane glycerophosphodiesterase GDE3 is a GPI-specific phospholipase C that cleaves and releases uPAR with consequent loss of the proteolytic and non-proteolytic activities of uPAR. In breast cancer cells, high GDE3 expression depletes endogenous uPAR resulting in a less transformed phenotype, correlating with higher survival probability in patients. Our results establish GDE3 as a negative regulator of the uPAR signaling network and, more generally, highlight GPI-anchor hydrolysis as a cell-intrinsic mechanism to alter cell behavior.