Escherichia coli FtsH degrades several integral membrane proteins, including YccA, having seven transmembrane segments, a cytosolic N-terminus and a periplasmic C-terminus. Evidence indicates that FtsH initiates proteolysis at the N-terminal cytosolic domain. SecY, having 10 transmembrane segments, is also a substrate of FtsH. We studied whether and how the FtsH-catalyzed proteolysis on the cytosolic side continues into the transmembrane and periplasmic regions using chimeric proteins, YccA-(P3)-PhoA-His6-Myc and SecY-(P5)-PhoA, with the alkaline phosphatase (PhoA) mature sequence in a periplasmic domain. The PhoA domain that was present within the fusion protein was rapidly degraded by FtsH when it lacked the DsbA-dependent folding. In contrast, both PhoA itself and the TM9-PhoA region of SecY-(P5)-PhoA were stable when expressed as independent polypeptides. In the presence of DsbA, the FtsH-dependent degradation stopped at a site near to the N-terminus of the PhoA moiety, leaving the PhoA domain (and its C-terminal region) undigested. The efficiency of this degradation stop correlated well with the rapidity of the folding of the PhoA domain. Thus, both transmembrane and periplasmic domains are degraded by the processive proteolysis by FtsH, provided they are not tightly folded. We propose that FtsH dislocates the extracytoplasmic domain of a substrate, probably using its ATPase activity.