β-Site amyloid precursor protein (APP)-cleaving enzyme 1 (BACE1) is the rate-limiting enzyme for amyloid-β (Aβ) generation and is considered promising drug target for Alzheimer's disease (AD). The co-chaperone BAG3 (Bcl-2-associated athanogene 3) plays an important role in maintaining intracellular protein homeostasis by regulating heat shock protein 70 (HSP70). Here, we reported that BAG3 expression was significantly elevated in AD. It interacted with and stabilized BACE1 by delaying its degradation through ubiquitin-proteasome and autophagy-lysosomal pathways. BAG3E455K and BAG3R480A mutations reduced their interaction with BACE1. SPOT peptide arrays revealed that BACE1 carboxyl-terminal peptide fragments bound to the RQ domain of BAG3. This interaction can be disrupted by BACE1-derived peptide (Tat-BACE1480-494), leading to decreased BACE1 stability. In APP23/PS45 double transgenic mice, Tat-BACE1480-494 reduced BACE1 levels, decreased Aβ production, and improved synaptic and cognitive deficits. These findings indicate that BAG3 forms complex with HSP70 and BACE1 to stabilize BACE1, suggesting that Tat-BACE1480-494, may represent an ideal class of neuroprotective therapeutics against AD.