Signal peptide peptidase (SPP) and the four homologous SPP-like (SPPL) proteases constitute a family of intramembrane aspartyl proteases with selectivity for type II-oriented transmembrane segments. Here, we have analysed the physiological function of the orphan protease SPPL2c, previously considered to represent a non-expressed pseudogene. We identified proteolytic activity of SPPL2c towards selected tail-anchored proteins. Despite shared ER localization, SPPL2c and SPP exhibit distinct, though partially overlapping substrate spectra and inhibitory profiles and are organised in different high molecular-weight complexes. Unexpectedly, SPPL2c is specifically expressed in murine and human testis where it is primarily localised in spermatids. In mice, SPPL2c-deficiency leads to a loss of elongated spermatids and reduced motility of mature spermatozoa, but preserved fertility. Additionally, matings of male and female SPPL2c-/- mice exhibit reduced litter sizes. Using proteomics we identified the sarco/endoplasmic reticulum Ca2+-ATPase (SERCA2)-regulating protein phospholamban (PLN) as a physiological SPPL2c substrate. Accumulation of PLN correlates with a decrease of intracellular Ca2+ levels in elongated spermatids that likely contributes to the compromised male germ cell differentiation and function of SPPL2c-/- mice.