Proteolytic processing of amyloid peptides (Aβs) is one important mechanism that controls the brain Aβ level. Although several Aβ-degrading enzymes were identified, evidence has suggested the presence of other peptidases. Here, we report a novel function of glutamate carboxypeptidase II (GCPII) in Aβ degradation in brain, which is a peptidase involved in N-acetylaspartylglutamate cleavage, folate metabolism, and prostate tumorigenesis. Maldi-Tof/MS analysis showed that recombinant human GCPII cleaved the Aβ1-40 and Aβ1-42 monomers at their C-termini, producing smaller fragments, and Aβ1-14 that lacked aggregation property and cellular toxicity. GCPII also degrades soluble oligomers and fibrils and can reduce the endogenous plaque size in brain sections obtained from amyloid precursor protein (APP) Swedish/presinilin (PS)-1ΔE9 transgenic mice. Overexpression of GCPII in either HEK293-APP Swedish cells or primary neurons and glial cells reduced the levels of secreted or exogenously supplemented Aβs and reduced Aβ-induced neurotoxicity, suggesting the biological significance of GCPII-mediated Aβ cleavage. Moreover, treatment of 8-mo-old transgenic mice for 1 mo with 2-(phosphonomethyl)-pentanedioic acid (10 mg/kg, intraperitoneally), a specific GCPII inhibitor, increased cerebral Aβ content. These results suggest an important physiological role for GCPII in Aβ clearance in brain and provide the evidence that dysregulation of GCPII is involved in Alzheimer's disease pathology.