Atg4 is required for cleaving Atg8, allowing it to be conjugated to phosphatidylethanolamine on phagophore membranes, a key step in autophagosome biogenesis. Deconjugation of Atg8 from autophagosomal membranes could be also a regulatory step in controlling autophagy. Therefore, the activity of Atg4 is important for autophagy and could be a target for therapeutic intervention. In this study, a sensitive and specific method to measure the activity of two Atg4 homologs in mammalian cells, Atg4A and Atg4B, was developed using a fluorescence resonance energy transfer (FRET)-based approach. Thus LC3B and GATE-16, two substrates that could be differentially cleaved by Atg4A and Atg4B, were fused with CFP and YFP at the N- and C-terminus, respectively, allowing FRET to occur. The FRET signals decreased in proportion to the Atg4-mediated cleavage, which separated the two fluorescent proteins. This method is highly efficient for measuring the enzymatic activity and kinetics of Atg4A and Atg4B under in vitro conditions. Applications of the assay indicated that the activity of Atg4B was dependent on its catalytic cysteine and expression level, but showed little changes under several common autophagy conditions. In addition, the assays displayed excellent performance in high throughput format and are suitable for screening and analysis of potential modulators. In summary, the FRET-based assay is simple and easy to use, is sensitive and specific, and is suitable for both routine measurement of Atg4 activity and high-throughput screening.