ALCAM/CD166 is a member of the immunoglobulin superfamily of cell adhesion molecules (Ig-CAMs) which mediates intercellular adhesion through either homophilic (ALCAM-ALCAM) or heterophilic (ALCAM-CD6) interactions. ALCAM-mediated adhesion is crucial in different physiological and pathological phenomena, with particular relevance in leukocyte extravasation, stabilization of the immunological synapse, T cell activation and proliferation and tumor growth and metastasis. Although the functional implications of ALCAM in these processes is well established, the mechanisms regulating its adhesive capacity remain obscure. Using confocal microscopy colocalization, and biochemical and functional analyses, we found that ALCAM directly associates with the tetraspanin CD9 on the leukocyte surface in protein complexes that also include the metalloproteinase ADAM17/TACE. The functional relevance of these interactions is evidenced by the CD9-induced upregulation of both homophilic and heterophilic ALCAM interactions, as reflected by increased ALCAM-mediated cell adhesion and T cell migration, activation and proliferation. The enhancement of ALCAM function induced by CD9 is mediated by a dual mechanism involving (1) augmented clustering of ALCAM molecules, and (2) upregulation of ALCAM surface expression due to inhibition of ADAM17 sheddase activity.