Production of the amyloid beta-peptide (Abeta) via sequential proteolytic cleavage of the amyloid precursor protein by beta- and gamma-secretases is strongly implicated in the pathogenesis of Alzheimer disease. The beta-secretase that executes the first cleavage event is a transmembrane aspartyl protease known as beta-site amyloid precursor protein-cleaving enzyme 1 (BACE1). BACE1 pre-mRNA is alternatively spliced through the use of alternative splice sites in exons 3 and 4, although the significance of these splicing events is unclear. Here, we quantitatively measured relative levels of BACE1 transcripts and identified a novel splice variant of BACE1. We found a subtle but significant difference in BACE1 splicing between brain and pancreas, indicating the cellular environment can affect BACE1 alternative splicing. Furthermore, we have shown that BACE1 proteins translated from alternatively spliced transcripts have dramatically reduced beta-secretase activity and promotion of BACE1 alternative splicing reduces Abeta production. These findings illustrate the importance of BACE1 alternative splicing in affecting the level of Abeta produced in cells and suggest that targeting regulation of BACE1 alternative splicing is a potential therapeutic strategy for lowering beta-secretase activity.