beta A4 amyloid peptide, the main constituent of amyloid plaques and cerebrovascular amyloid deposits associated with Alzheimer's disease, derives from a large precursor protein (APP) by the action of beta- and gamma-secretases, the unidentified endoproteases which release the amino and carboxyl termini of beta A4, respectively. Several gamma-secretase cleavage sites exist which yield the more soluble (1-39/40) forms of beta A4 and the longer forms (1-42/43) which have a greater tendency to aggregate into amyloid plaques. gamma-Secretase activity may therefore be critical in amyloid formation. In this study, a synthetic peptide which encompasses the various gamma-secretase cleavage sites was used as a substrate to probe proteases of various classes and specificities. Elastase, collagenase, and cathepsin D cleaved at the amyloidogenic sites (after Ala42 or after Thr43) to release the carboxyl termini of the aggregating forms. In addition, collagenase and pepsin released the carboxyl terminus of the more soluble forms. Human brain fractions enriched in lysosomes contained a proteolytic activity that cleaved the substrate at the amyloidogenic site(s). This activity was more active at acidic pH and was inhibited by pepstatin, two characteristics of the lysosomal aspartyl proteinase cathepsin D. The same lysosomal fractions were found to contain APP carboxyl-terminal fragments which are potentially amyloidogenic. These were degraded, only in acidic conditions, by an endogenous protease activity inhibited by pepstatin. Thus, a cathepsin D-like activity from human brain is a candidate for APP gamma-secretase(s).