A 4.2-kDa polypeptide termed beta protein (A beta) accumulates in senile plaques and blood vessels in Alzheimer's disease and Down's syndrome. It is widely believed that A beta is the product of the posttranslational processing of a larger precursor protein, the beta amyloid precursor protein (APP). The proteolytic processes involved in the generation of the A beta are virtually unknown. Here the purification and characterization of a protease from Alzheimer's disease brain capable of cleaving a 10 amino acid synthetic substrate flanking the N terminus of A beta at the Met-Asp bond are described. Most importantly, the purified protease degrades human recombinant APP and generates a 15-kDa amyloidogenic fragment. The protease requires the presence of a reducing agent for its activity. Its pH optimum is around physiological pH, while the enzyme is inactive at acidic pH (below pH 5.0) and basic pH (over pH 7.6). The enzyme is inhibited by N-ethylmaleimide, (hydroxymercuri)benzoate, 1.10-phenanthroline, EDTA, and EGTA. Phenylmethanesulfonyl fluoride has no effect on its activity. This protease is devoid of caseinolytic or gelatinase activities, as well as activities against cathepsin B and cathepsin L substrates. Sequence analysis reveals high homology to the rat metallopeptidase EC 126.96.36.199, a protease involved in neuropeptide processing.