Cerebral deposition of amyloid beta peptide (Abeta) is an early and critical feature of Alzheimer's disease. Abeta generation depends on proteolytic cleavage of the amyloid precursor protein (APP) by two unknown proteases: beta-secretase and gamma-secretase. These proteases are prime therapeutic targets. A transmembrane aspartic protease with all the known characteristics of beta-secretase was cloned and characterized. Overexpression of this protease, termed BACE (for beta-site APP-cleaving enzyme) increased the amount of beta-secretase cleavage products, and these were cleaved exactly and only at known beta-secretase positions. Antisense inhibition of endogenous BACE messenger RNA decreased the amount of beta-secretase cleavage products, and purified BACE protein cleaved APP-derived substrates with the same sequence specificity as beta-secretase. Finally, the expression pattern and subcellular localization of BACE were consistent with that expected for beta-secretase. Future development of BACE inhibitors may prove beneficial for the treatment of Alzheimer's disease.