The amyloidogenic Abeta peptide is liberated from the amyloid precursor protein (APP) by two proteolytic activities, beta-secretase and gamma-secretase. Recently, a type I membrane protein termed BACE (beta-site APP cleaving enzyme) with characteristics of an aspartyl protease has been identified as the beta-secretase. We undertook a series of biochemical and morphological investigations designed to characterize the basic properties of this protein. Initial studies indicated that BACE undergoes N-linked glycosylation at three of four potential sites. Metabolic pulse-chase experiments revealed that after core glycosylation, BACE is rapidly and efficiently transported to the Golgi apparatus and distal secretory pathway. BACE was also found to be quite stable, being turned over with a t(12) of approximately 16 h. Retention of BACE in the endoplasmic reticulum by introduction of a C-terminal dilysine motif prevented complex carbohydrate processing and demonstrated that propeptide cleavage occurs after exit from this organelle. BACE exhibited intramolecular disulfide bonding but did not form oligomeric structures by standard SDS-polyacrylamide gel electrophoresis analysis and sedimented as a monomer in sucrose velocity gradients. Immunofluorescence studies showed a largely vesicular staining pattern for BACE that colocalized well with endosomal, but not lysosomal, markers. Measurable levels of BACE were also detected on the plasma membrane by both immunostaining and cell surface biotinylation, and cycling of the protein between the cell membrane and the endosomes was documented. A cytoplasmic dileucine motif was found to be necessary for normal targeting of BACE to the endosomal system and accumulation of the protein in this intracellular site.