Amyloid β peptide (Aβ), the principal proteinaceous component of amyloid plaques in brains of Alzheimer’s disease patients, is derived by proteolytic cleavage of the amyloid precursor protein (APP). Proteolytic cleavage of APP by a putative α-secretase within the Aβ sequence precludes the formation of the amyloidogenic peptides and leads to the release of soluble APPsα into the medium. By overexpression of a disintegrin and metalloprotease (ADAM), classified as ADAM 10, in HEK 293 cells, basal and protein kinase C-stimulated α-secretase activity was increased severalfold. The proteolytically activated form of ADAM 10 was localized by cell surface biotinylation in the plasma membrane, but the majority of the proenzyme was found in the Golgi. These results support the view that APP is cleaved both at the cell surface and along the secretory pathway. Endogenous α-secretase activity was inhibited by a dominant negative form of ADAM 10 with a point mutation in the zinc binding site. Studies with purified ADAM 10 and Aβ fragments confirm the correct α-secretase cleavage site and demonstrate a dependence on the substrate’s conformation. Our results provide evidence that ADAM 10 has α-secretase activity and many properties expected for the proteolytic processing of APP. Increases of its expression and activity might be beneficial for the treatment of Alzheimer’s disease.