Amyloid-beta (Abeta) has remained a central feature in research into Alzheimer's disease (AD). Yet the function of the amyloid-beta protein precursor (AbetaPP) and its processing products in the central nervous system is controversial. This review examines experimental literature from cell cultures to transgenic AD and brain injury models with a special emphasis on the functional role of AbetaPP and AbetaPP-derived peptides. AbetaPP knock-out mice exhibit severe metabolic abnormalities and behavioral deficits, indicating an important physiological function of AbetaPP. Also, an increasing body of evidence suggests that while Abeta is undoubtedly linked to neurodegeneration, the soluble amino-terminal fragment of AbetaPP (sAbetaPPalpha) has neuroprotective, neurotrophic, and cell adhesive functions. Moderate overexpression of human AbetaPP in rodents does not produce apparent Abeta pathology and has no significant effect on cognitive or sensorimotor behavior and, surprisingly, may even provide histological neuroprotection against focal cerebral ischemia. In contrast, phenotypes with more severe Abeta pathology show impaired cognitive performance, increased vulnerability to brain ischemia and trauma, and less favorable functional outcome even before Abeta deposition. A delicate balance in AbetaPP processing seems to determine its functional consequences. Thus, it is tempting to speculate that promotion of alpha-secretase-mediated cleavage of AbetaPP, which leads to increased sAbetaPPalpha production, provides a novel therapeutic strategy in the treatment of AD and brain injury.