The brains of Alzheimer's disease (AD) patients display cerebrovascular and parenchymal deposits of β‐amyloid (Aβ) peptides, which are derived by proteolytic processing by the β‐site APP‐cleaving enzyme 1 (BACE1) of the amyloid precursor protein (APP). The rat BACE1 promoter has a nuclear factor‐κB (NF‐κB) binding site. Deletion studies with a BACE1 promoter/luciferase reporter suggest that the NF‐κB binding DNA consensus sequence plays a suppressor role, when occupied by NF‐κB, in the regulation of neuronal brain BACE1 expression. Here we characterize a signal transduction pathway that may be responsible for the increases in Aβ associated with AD. We propose that the transcription factor NF‐κB acts as a repressor in neurons but as an activator of BACE1 transcription in activated astrocytes present in the CNS under chronic stress, a feature present in the AD brain. The activated astrocytic stimulation of BACE1 may in part account for increased BACE1 transcription and subsequent processing of Aβ in a cell‐specific manner in the aged and AD brain. As measured by reporter gene promoter constructs and endogenous BACE1 protein expression, a functional NF‐κB site was stimulatory in activated astrocytes and Aβ‐exposed neuronal cells and repressive in neuronal and nonactivated astrocytic cells. Given the evidence for increased levels of activated astrocytes in the aged brain, the age‐ and AD‐associated increases in NF‐κB in brain may be significant contributors to increases in Aβ, acting as a positive feedback loop of chronic inflammation, astrocyte activation, increased p65/p50 activation of BACE1 transcription, and further inflammation. © 2007 Wiley‐Liss, Inc.