Alzheimer's disease (AD) is a progressive senile dementia characterized by deposition of a 4 kDa peptide of 39-42 residues known as amyloid beta-peptide (Abeta) in the form of senile plaques and the microtubule associated protein tau as paired helical filaments. Genetic studies have identified mutations in the Abeta precursor protein (APP) as the key triggers for the pathogenesis of AD. Other genes such as presenilins 1 and 2 (PS1/2) and apolipoprotein E (APOE) also play a critical role in increased Abeta deposition. Several biochemical and molecular studies using transfected cells and transgenic animals point to mechanisms by which Abeta is generated and aggregated to trigger the neurodegeneration that may cause AD. Three important enzymes collectively known as "secretases" participate in APP processing. An enzymatic activity, beta-secretase, cleaves APP on the amino side of Abeta producing a large secreted derivative, sAPPbeta, and an Abeta-bearing membrane-associated C-terminal derivative, CTFbeta, which is subsequently cleaved by the second activity, gamma-secretase, to release Abeta. Alternatively, a third activity, alpha-secretase, cleaves APP within Abeta to the secreted derivative sAPPalpha and membrane-associated CTFalpha. The predominant secreted APP derivative is sAPPalpha in most cell-types. Most of the secreted Abeta is 40 residues long (Abeta40) although a small percentage is 42 residues in length (Abeta42). However, the longer Abeta42 aggregates more readily and was therefore considered to be the pathologically important form. Advances in our understanding of APP processing, trafficking, and turnover will pave the way for better drug discovery for the eventual treatment of AD. In addition, APP gene regulation and its interaction with other proteins may provide useful drug targets for AD. The emerging knowledge related to the normal function of APP will help in determining whether or not the AD associated changes in APP metabolism affect its function. The present review summarizes our current understanding of APP metabolism and function and their relationship to other proteins involved in AD.