Intramembrane-cleaving aspartic protease (I-CLiP) that cleaves type II membrane signal peptides in the hydrophobic plane of the membrane. Functions in FASLG, ITM2B and TNF processing. Catalyzes the intramembrane cleavage of the anchored fragment of shed TNF-alpha (TNF), which promotes the release of the intracellular domain (ICD) for signaling to the nucleus. Also responsible for the intramembrane cleavage of Fas antigen ligand FASLG, which promotes the release of the intracellular FasL domain (FasL ICD). Essential for degradation of the invariant chain CD74 that plays a central role in the function of antigen-presenting cells in the immune system. Plays a role in the regulation of innate and adaptive immunity. Interacts with ITM2B. Colocalizes with palmitoylated and myristoylated proteins at the plasma membrane. The PAL motif is required for normal active site conformation. The catalytic domains embedded in the membrane are in the opposite orientation to that of the presenilin protein family; therefore, it is predicted to cleave type II-oriented substrate peptides like the prototypic protease SPP (By similarity). The C-terminal tail is necessary for lysosomal transport (PubMed:21896273). Glycosylated. Knockout mice increase susceptibility to mycobacterial infection after BCG administration compared to wild-type mice. Mutant animals have decreased numbers of DC2 dendritic cells (cDC2), a smaller sized IFNG+ CD4+ and CD8+ T cell fraction, and decreased production of IFNG by splenocytes compared to wild-type animals. They also have profound B cell deficiency due to CD74 NTF accumulation. The protein is required for optimal IFNG production by T cells after mycobacterial infection (PubMed:30127434). Mutant mice confirm depletion of conventional cDC2 cells in lymphatic tissues of null mice. Detailed studies of bone marrow-derived dendritic cells exposed to mycobacteria show enhanced secretion of Il1b, where production of Il10 and Ifnb1 is reduced. There are also some alterations in stimulation of pattern recognition receptors (PubMed:33239420). Belongs to the peptidase A22B family.