Escherichia coli RseP, a member of the site-2 protease family of intramembrane proteases, is involved in the activation of the σE extracytoplasmic stress response and elimination of signal peptides from the cytoplasmic membrane. However, whether RseP has additional cellular functions is unclear. In this study, we used mass spectrometry-based quantitative proteomic analysis to search for new substrates that might reveal unknown physiological roles for RseP. Our data showed that the levels of several Fec system proteins encoded by the fecABCDE operon (fec operon) were significantly decreased in an RseP-deficient strain. The Fec system is responsible for the uptake of ferric citrate, and the transcription of the fec operon is controlled by FecI, an alternative sigma factor, and its regulator FecR, a single-pass transmembrane protein. Assays with a fec operon expression reporter demonstrated that the proteolytic activity of RseP is essential for the ferric citrate-dependent upregulation of the fec operon. Analysis using the FecR protein and FecR-derived model proteins showed that FecR undergoes sequential processing at the membrane and that RseP participates in the last step of this sequential processing to generate the N-terminal cytoplasmic fragment of FecR that participates in the transcription of the fec operon with FecI. A shortened FecR construct was not dependent on RseP for activation, confirming this cleavage step is the essential and sufficient role of RseP. Our study unveiled that E. coli RseP performs the intramembrane proteolysis of FecR, a novel physiological role that is essential for regulating iron uptake by the ferric citrate transport system.