Deposition of amyloid β protein (Aβ)is one of the characteristic features of Alzheimer's disease (AD) neuropathology. Beta‐secretase, a β‐site APP cleaving enzyme 1 (BACE1), is essential for A β biosynthesis. Although inhibition of BACE1 is considered a valid therapeutic target for AD, the enzymatic dynamics of BACE1 in regulating APP processing and A β generation has not yet been fully defined. To examine this issue, tightly controlled inducible BACE1 gene expression was established in the neuronal cell line N2ABP1 and the non‐neuronal cell line E2BP1 using an ecdysone‐inducible system. The BACE1 protein level was increased in a time‐and dosage‐dependent manner in the inducible BACE1 stable cells by treatment with inducer ponasterone A. The generation of APP CTFβ, the β‐secretase product, increased proportionally with the level of BACE1 protein expression. However, Aβ40/42 production sharply increased to the plateau level with a relatively small increase in BACE1 expression. Although further increasing BACE1 expression increased β‐secretase activity, it had no additional effect on A β production. Furthermore, we found that BACE1 mRNA levels and BACE1 promoter activity were significantly lower than APP mRNA levels and APP promoter activity. Our data demonstrate that lower BACE transcription is responsible for the minority of APP undergoing the amyloidogenic pathway and relatively lower A β production in the normal conditions, and that a slight increase in BACE1 can induce a dramatic elevation in A β production, indicating that the increase in BACE1 can potentially increase neuritic plaque formation in the pathological condition.—Li, Y., Zhou, W., Tong, Y., He, G., Song, W. Control of APP processing and A β generation level by BACE1 enzymatic activity and transcription. FASEB J. 20, 285–292 (2006)