Intracellular localization of novel human brain carboxypeptidase B (HBCPB) was investigated in human hippocampus, using immunohistochemistry by confocal laser microscopy and biochemical purification of the homogenate by density gradient ultracentrifugation. The former revealed that the majority of HBCPB was expressed in the endoplasmic reticulum, in which the HBCPB-specific C14-module immunoreactivity was colocalized with GRP78 immunoreactivity, a stress 70 heat shock protein specifically expressed in the endoplasmic reticulum. The latter showed that anti-C14-module immunoreactivity and prepro-HBCPB immunoreactivity were both enriched in the microsome fraction, especially in that of the endoplasmic reticulum-density fraction of normal human hippocampal homogenates from various sources. However, HBCPB prepared from human hippocampus showed exopeptidase activity for synthetic beta-amyloid 1-42 peptide, in which Abeta X-42 C-terminus immunoreactivity was decreased in a fashion dose-dependent of the amount of the protease added. These findings indicate that HBCPB, which is expressed in the endoplasmic reticulum of a group of neuronal perikarya, may play an important physiological role in degradation of beta-amyloid 1-42, which is specifically generated in the endoplasmic reticulum of human and rodent neurons and is also regarded as the most pathogenic and aggregatable species among all beta-amyloid peptides.