Release of cell surface-bound ligands by A-Disintegrin-And-Metalloprotease (ADAM) transmembrane metalloproteases is essential for signalling by cytokine, cell adhesion, and tyrosine kinase receptors. For Eph receptor ligands, it provides the switch between cell-cell adhesion and repulsion. Ligand shedding is tightly controlled by intrinsic tyrosine kinase activity, which for Eph receptors relies on the release of an inhibitory interaction of the cytoplasmic juxtamembrane segment with the kinase domain. However, a mechanism linking kinase and sheddase activities had remained elusive. We demonstrate that it is a membrane-proximal localisation of the latent kinase domain that prevents ephrin ligand shedding in trans. Fluorescence lifetime imaging microscopy and electron tomography reveal that activation extends the Eph receptor tyrosine kinase intracellular domain away from the cell membrane into a conformation that facilitates productive association with ADAM10. Accordingly, EphA3 mutants with constitutively-released kinase domains efficiently support shedding, even when their kinase is disabled. Our data suggest that this phosphorylation-activated conformational switch of EphA3 directly controls ADAM-mediated shedding.