The amyloid protein (A beta or beta A4) is the major constituent of amyloid plaques in the Alzheimer's disease brain. A beta is cleaved from the amyloid precursor protein (APP) by a mechanism which is poorly understood. Cell culture studies suggest that APP may be cleaved by secretases within the late Golgi compartment. Studies performed so far have mainly used exogenous APP and synthetic peptides as substrates. For this study, a Golgi and plasma membrane-enriched fraction was isolated from rat brain and incubated at 37 degrees C at pH 7.2 to study the degradation of endogenous APP. The breakdown of APP was accompanied by the concomitant generation of A beta-containing C-terminal fragments, in a time-dependent fashion. The metal ion chelators EDTA and 1,10-phenanthroline inhibited this degradation. The inhibition by EDTA was reversed by 50 microM Zn2+ but not by other metal ions. The protease activity was not inhibited by cysteine, serine or aspartic protease inhibitors nor was it inhibited by compounds which are inhibitors of known metalloendopeptidases and matrix metalloproteinases (cFP, phosphoramidon and TIMP-2). Our data suggest that a novel Zn(2+)-dependent metalloprotease activity associated with a Golgi and plasma membrane-enriched fraction can degrade endogenous APP to generate A beta containing C-terminal fragments. This protease may generate amyloidogenic fragments of APP which may serve as precursors for A beta.