Alzheimer's disease (AD) is thought by many to result from the accumulation of the neurotoxic amyloid-beta (A beta) peptide in brain parenchyma. The process by which A beta is proteolytically derived from the larger amyloid precursor protein (APP) has been the focus of much attention in the AD research field over the past decade. Recently, several of the proteins directly involved in the generation of A beta have been identified and characterized providing a number of viable therapeutic targets for the treatment of AD. However, the cellular mechanisms by which these proteins interact in the proteolytic processing of APP have not been well defined, nor are they readily apparent when one considers what is known about the intracellular localization and trafficking of the various participants. This article will review the underlying cell biology of A beta production and discuss the mechanistic options for APP processing given the current knowledge of the proteases involved.