Natriuretic peptides (NPs) are cyclic vasoactive peptide hormones with high therapeutic potential. Three distinct NPs (ANP, BNP, and CNP) can selectively activate natriuretic peptide receptors, NPR-A and NPR-B, raising the cyclic GMP (cGMP) levels. Insulin-degrading enzyme (IDE) was found to rapidly cleave ANP, but the functional consequences of such cleavages in the cellular environment and the molecular mechanism of recognition and cleavage remain unknown. Here, we show that reducing expression levels of IDE profoundly alters the response of NPR-A and NPR-B to the stimulation of ANP, BNP, and CNP in cultured cells. IDE rapidly cleaves ANP and CNP, thus inactivating their ability to raise intracellular cGMP. Conversely, reduced IDE expression enhances the stimulation of NPR-A and NPR-B by ANP and CNP, respectively. Instead of proteolytic inactivation, IDE cleavage can lead to hyperactivation of BNP toward NPR-A. Conversely, decreasing IDE expression reduces BNP-mediated signaling. Additionally, the cleavages of ANP and BNP by IDE render them active with NPR-B and a reduction of IDE expression diminishes the ability of ANP and BNP to stimulate NPR-B. Our kinetic and crystallographic analyses offer the molecular basis for the selective degradation of NPs and their variants by IDE. Furthermore, our studies reveal how IDE utilizes its catalytic chamber and exosite to engulf and bind up to two NPs leading to biased stochastic, non-sequential cleavages and the ability of IDE to switch its substrate selectivity. Thus, the evolutionarily conserved IDE may play a key role in modulating and reshaping the strength and duration of NP-mediated signaling.