The amyloid precursor protein (APP) is cleaved to produce the Alzheimer disease-associated peptide Abeta, but the normal functions of uncleaved APP in the brain are unknown. We found that APP was present in the postsynaptic density of central excitatory synapses and coimmunoprecipitated with N-methyl-d-aspartate receptors (NMDARs). The presence of APP in the postsynaptic density was supported by the observation that NMDARs regulated trafficking and processing of APP; overexpression of the NR1 subunit increased surface levels of APP, whereas activation of NMDARs decreased surface APP and promoted production of Abeta. We transfected APP or APP RNA interference into primary neurons and used electrophysiological techniques to explore the effects of APP on postsynaptic function. Reduction of APP decreased (and overexpression of APP increased) NMDAR whole cell current density and peak amplitude of spontaneous miniature excitatory postsynaptic currents. The increase in NMDAR current by APP was due to specific recruitment of additional NR2B-containing receptors. Consistent with these findings, immunohistochemical experiments demonstrated that APP increased the surface levels and decreased internalization of NR2B subunits. These results demonstrate a novel physiological role of postsynaptic APP in enhancing NMDAR function.