Spore formation in Bacillus subtilis relies on a regulated intramembrane proteolysis (RIP) pathway that synchronizes mother-cell and forespore development. To address the molecular basis of this SpoIV transmembrane signaling, we carried out a structure-function analysis of the activating protease CtpB. Crystal structures reflecting distinct functional states show that CtpB constitutes a ring-like protein scaffold penetrated by two narrow tunnels. Access to the proteolytic sites sequestered within these tunnels is controlled by PDZ domains that rearrange upon substrate binding. Accordingly, CtpB resembles a minimal version of a self-compartmentalizing protease regulated by a unique allosteric mechanism. Moreover, biochemical analysis of the PDZ-gated channel combined with sporulation assays reveal that activation of the SpoIV RIP pathway is induced by the concerted activity of CtpB and a second signaling protease, SpoIVB. This proteolytic mechanism is of broad relevance for cell-cell communication, illustrating how distinct signaling pathways can be integrated into a single RIP module