The skin including the microvascular endothelium is an established peripheral source and target of the immunomodulatory proopiomelanocortin (POMC) peptides adrenocorticotropin (ACTH) and -melanocyte-stimulating hormone (-MSH). Whereas intracellular POMC peptide generation is well-characterized, less is known on their extracellular processing in peripheral tissues by the neuropeptide-specific zinc metalloproteases neprilysin (NEP) and angiotensin-converting enzyme (ACE). This may locally control POMC peptide bioavailability and activation of ACTH/-MSH-specific melanocortin receptors (MC). In a cell-free system, endothelial cell (EC) membranes prepared from ACE^high/NEP^low expressing primary dermal EC (HDMEC) and the ACE^low/NEP^high expressing EC line HMEC-1 degraded ACTH_1-39 over time resulting in temporary increased -MSH immunoreactivity. MALDI-TOF mass spectroscopy (MS) peptide mapping and electrospray ionization (ESI)-MS sequencing identified several stable fragments generated from ACTH_1-39, ACTH_1-24 and -MSH by EC membranes or recombinant NEP and ACE. Whereas some fragments could be assigned to a cell-specific NEP or ACE activity, other degradation products require additional enzyme activity. Pharmacologic NEP inhibition enhanced the ACTH and -MSH-mediated activation of EC ectopically expressing MC₁. Likewise, selected peptides such as -MSH_2-12 generated from ACTH_1-39 and -MSH by recombinant NEP displayed equipotent MC₁-activating properties in vitro and anti-inflammatory activity in murine allergic contact dermatitis in vivo as compared to the parental peptides. Thus, NEP and ACE significantly contribute to the EC processing of stress hormones (ACTH) and anti-inflammatory peptides (-MSH), which modulates MC₁ activation, but does not completely inactivate the peptide ligand. Since NEP and ACE are regulated by inflammatory mediators and UV light, this may be important for ACTH/MSH-modulated skin inflammation.