The principal component of amyloid plaques in Alzheimer disease is beta-amyloid protein, an approximately 4-kDa peptide derived from amyloid precursor proteins. Previous studies have established that amyloid precursor proteins are secreted after proteolytic cleavage within the beta-amyloid peptide. The present investigation documents that, in cultured cells, amyloid precursor protein is cleaved on the plasma membrane by a membrane-bound endoprotease and that the specificity of peptide bond hydrolysis is largely independent of the primary sequence of the precursor. The principal determinants of cleavage appear to be an alpha-helical conformation and the distance (12-13 residues) of the hydrolyzed bond from membrane.