ADAM10 (a disintegrin and metalloproteinase 10) is the principal alpha-secretase responsible for the non-amyloidogenic processing of the Alzheimer's disease (AD)-associated amyloid precursor protein (APP). A reciprocal relationship exists between non-amyloidogenic and amyloidogenic APP processing such that impaired ADAM10-mediated proteolysis of the protein serves to enhance amyloidogenic processing (by beta- and gamma-secretases) thereby elevating levels of the amyloid beta (A beta)-peptides responsible for the neuronal death observed in the AD-afflicted brain. It has previously been demonstrated that the amyloidogenic processing of APP occurs within specialized regions of the cell membrane known as lipid rafts. Conversely, ADAM10-mediated non-amyloidogenic processing is thought to occur in the non-raft region of the membrane with the majority of ADAM10 being excluded from rafts. In the current study, we hypothesized that the exclusion of ADAM10 from rafts may leave the APP substrate particularly susceptible to alternative beta-secretase cleavage within these microdomains. In order to test this hypothesis, we targeted ADAM10 to rafts by replacing its transmembrane and cytosolic regions with a glycosylphosphatidylinositol (GPI) anchor and examined the associated effects on APP proteolysis. We found that whereas wild-type ADAM10 was exclusively present in the non-raft region of the membrane where it enhanced non-amyloidogenic APP proteolysis, GPI-anchored ADAM10 was effectively targeted to rafts where it competed with beta-secretase thereby reducing amyloidogenic APP processing. These results indicate that it is the exclusion of ADAM10 from rafts rather than simply the raft localization of beta- and gamma-secretases that underlies A beta-peptide generation within these cellular structures.