We previously identified abnormalities of the endocytic pathway in neurons as the earliest known pathology in sporadic Alzheimer's disease (AD) and Down's syndrome brain. In this study, we modeled aspects of these AD-related endocytic changes in murine L cells by overexpressing Rab5, a positive regulator of endocytosis. Rab5-transfected cells exhibited abnormally large endosomes immunoreactive for Rab5 and early endosomal antigen 1, resembling the endosome morphology seen in affected neurons from AD brain. The levels of both Abeta40 and Abeta42 in conditioned medium were increased more than 2.5-fold following Rab5 overexpression. In Rab5 overexpressing cells, the levels of beta-cleaved amyloid precursor protein (APP) carboxyl-terminal fragments (betaCTF), the rate-limiting proteolytic intermediate in Abeta generation, were increased up to 2-fold relative to APP holoprotein levels. An increase in beta-cleaved soluble APP relative to alpha-cleaved soluble APP was also observed following Rab5 overexpression. BetaCTFs were co-localized by immunolabeling to vesicular compartments, including the early endosome and the trans-Golgi network. These results demonstrate a relationship between endosomal pathway activity, betaCTF generation, and Abeta production. Our findings in this model system suggest that the endosomal pathology seen at the earliest stage of sporadic AD may contribute to APP proteolysis along a beta-amyloidogenic pathway.