Sequential proteolytic processing of the Amyloid Precursor Protein (APP) by beta- and gamma-secretases generates the 4-kDa amyloid (A beta) peptide, a key component of the amyloid plaques seen in Alzheimer's disease (AD). We and others have recently reported the identification and characterisation of an aspartic proteinase, Asp2 (BACE), as beta-secretase. Here we describe the characterization of a second highly related aspartic proteinase, Asp1 as a second beta-secretase candidate. Asp1 is expressed in brain as detected at the mRNA level and at the protein level. Transient expression of Asp1 in APP-expressing cells results in an increase in the level of beta-secretase-derived soluble APP and the corresponding carboxy-terminal fragment. Paradoxically there is a decrease in the level of soluble A beta secreted from the cells. Asp1 colocalizes with APP in the Golgi/endoplasmic reticulum compartments of cultured cells. Asp1, when expressed as an Fc fusion protein (Asp1-Fc), has the N-terminal sequence ALEP..., indicating that it has lost the prodomain. Asp1-Fc exhibits beta-secretase activity by cleaving both wild-type and Swedish variant (KM/NL) APP peptides at the beta-secretase site.