The formation of extracellular amyloid plaques is a common patho-biochemical event underlying several debilitating human conditions, including Alzheimer's disease (AD). Considerable evidence implies that AD damage arises primarily from small oligomeric amyloid forms of Abeta peptide, but the precise mechanism of pathogenicity remains to be established. Using a cell culture system that reproducibly leads to the formation of Alzheimer's Abeta amyloid plaques, we show here that the formation of a single amyloid plaque represents a template-dependent process that critically involves the presence of endocytosis- or phagocytosis-competent cells. Internalized Abeta peptide becomes sorted to multivesicular bodies where fibrils grow out, thus penetrating the vesicular membrane. Upon plaque formation, cells undergo cell death and intracellular amyloid structures become released into the extracellular space. These data imply a mechanism where the pathogenic activity of Abeta is attributed, at least in part, to intracellular aggregates.