The reduced antioxidative defense in allele epsilon4 carriers is suggested to contribute to beta-amyloidosis in Alzheimer's disease and Down's syndrome. We studied the effect of oxidative stress on accumulation of amyloid-beta peptide (Abeta) in vascular smooth muscle cells (SMCs) that are engaged in production of amyloid-beta in vivo. Previously, we found that oxidative stress caused by ferrous ions induced accumulation of Abeta-apolipoprotein E deposits in lysosomes and was associated with a greater oxidative protein damage in epsilon4 carriers. Here, we demonstrate that ferrous ions induce formation of Abeta deposits also in vascular tunica media in organotypic cultures of whole brain vessels, suggesting the role of oxidative stress in development of vascular beta-amyloidosis. Cellular accumulation of Abeta in SMCs treated with ferrous ions was associated with a greater accumulation of C-terminal amyloid precursor protein (APP) fragments in epsilon4/epsilon4 than in epsilon3/epsilon3 myocytes and reduced the amount of soluble APPalpha in epsilon3/epsilon3, but not epsilon4/epsilon4, cultures. Antioxidant vitamin E prevented these effects, and, when applied alone, diminished the amount of APP C-terminal fragments and increased the amount of secreted APP in epsilon3/epsilon3, but not epsilon4/epsilon4, cells. C-terminal APP-immunoreactive material was accumulated in lysosomes partly with Abeta- and N-terminal APP immunoreactivities. These results suggest that the increased accumulation of APP and its fragments in lysosomes may yield additional amounts of cellular Abeta, particularly in epsilon4 carriers. We hypothesize that the altered processing of APP in SMCs locally exposed to oxidative stress facilitates cellular deposition of Abeta and contribute to the increased risk of development of beta-amyloidosis in epsilon4/epsilon4 carriers.