The amyloid precursor protein (APP) is implied both in cell growth and differentiation and in neurodegenerative processes in Alzheimer disease. Regulated proteolysis of APP generates biologically active fragments such as the neuroprotective secreted ectodomain sAPPalpha and the neurotoxic beta-amyloid peptide. Furthermore, it has been suggested that the intact transmembrane APP plays a signaling role, which might be important for both normal synaptic plasticity and neuronal dysfunction in dementia. To understand APP signaling, we tracked single molecules of APP using quantum dots and quantitated APP homodimerization using fluorescence lifetime imaging microscopy for the detection of Förster resonance energy transfer in living neuroblastoma cells. Using selective labeling with synthetic fluorophores, we show that the dimerization of APP is considerably higher at the plasma membrane than in intracellular membranes. Heparan sulfate significantly contributes to the almost complete dimerization of APP at the plasma membrane. Importantly, this technique for the first time structurally defines the initiation of APP signaling by binding of a relevant physiological extracellular ligand; our results indicate APP as receptor for neuroprotective sAPPalpha, as sAPPalpha binding disrupts APP dimers, and this disruption of APP dimers by sAPPalpha is necessary for the protection of neuroblastoma cells against starvation-induced cell death. Only cells expressing reversibly dimerized wild-type, but not covalently dimerized mutant APP are protected by sAPPalpha. These findings suggest a potentially beneficial effect of increasing sAPPalpha production or disrupting APP dimers for neuronal survival.