The novel transmembrane aspartic protease BACE (for Beta-site APP Cleaving Enzyme) is the beta-secretase that cleaves amyloid precursor protein to initiate beta-amyloid formation. As such, BACE is a prime therapeutic target for the treatment of Alzheimer's disease. BACE, like other aspartic proteases, has a propeptide domain that is removed to form the mature enzyme. BACE propeptide cleavage occurs at the sequence RLPR downward arrowE, a potential furin recognition motif. Here, we explore the role of furin in BACE propeptide domain processing. BACE propeptide cleavage in cells does not appear to be autocatalytic, since an inactive D93A mutant of BACE is still cleaved appropriately. BACE and furin co-localize within the Golgi apparatus, and propeptide cleavage is inhibited by brefeldin A and monensin, drugs that disrupt trafficking through the Golgi. Treatment of cells with the calcium ionophore, leading to inhibition of calcium-dependent proteases including furin, or transfection with the alpha(1)-antitrypsin variant alpha(1)-PDX, a potent furin inhibitor, dramatically reduces cleavage of the BACE propeptide. Moreover, the BACE propeptide is not processed in the furin-deficient LoVo cell line; however, processing is restored upon furin transfection. Finally, in vitro digestion of recombinant soluble BACE with recombinant furin results in complete cleavage only at the established E46 site. Taken together, our results strongly suggest that furin, or a furin-like proprotein convertase, is responsible for cleaving the BACE propeptide domain to form the mature enzyme.