During regulated intramembrane proteolysis (RIP) a membrane-spanning substrate protein is cleaved by an ectodomain sheddase and an intramembrane cleaving protease. A cytoplasmic intracellular domain (ICD) is liberated, which can migrate to the nucleus thereby influencing transcriptional regulation. Signal peptide peptidase-like (SPPL) 2a and 2b have been implicated in RIP of type II transmembrane proteins. Even though SPPL2a might represent a potential pharmacological target for treatment of B-cell-mediated autoimmunity, no specific and potent inhibitors for this enzyme are currently available. We report here on the first quantitative cell-based assay for measurement of SPPL2a/b activity. Demonstrating the failure of standard Gal4/VP16 reporter assays for SPPL2a/b analysis, we have devised a novel system employing β-galactosidase (βGal) complementation. This is based on detecting nuclear translocation of the proteolytically released substrate ICDs, which results in specific restoration of βGal activity. Utilizing this potentially high-throughput compatible new setup, we demonstrate nuclear translocation of the ICDs from integral membrane protein 2B (ITM2B), tumor necrosis factor (TNF) and CD74 and identify secreted frizzled-related protein 2 (SFRP2) as potential transcriptional downstream target of the CD74 ICD. We show that the presented assay is easily adaptable to other intramembrane proteases and therefore represents a valuable tool for the functional analysis and development of new inhibitors of this class of enzymes.