The A4 protein (or beta-protein) is a 42- or 43-amino-acid peptide present in the extracellular neuritic plaques in Alzheimer's disease and is derived from a membrane-bound amyloid protein precursor (APP). Three forms of APP have been described and are referred to as APP695, APP751 and APP770, reflecting the number of amino acids encoded for by their respective complementary DNAs. The two larger APPs contain a 57-amino-acid insert with striking homology to the Kunitz family of protease inhibitors. Here we report that the deduced amino-terminal sequence of APP is identical to the sequence of a cell-secreted protease inhibitor, protease nexin-II (PN-II). To confirm this finding, APP751 and APP695 cDNAs were over-expressed in the human 293 cell line, and the secreted N-terminal extracellular domains of these APPs were purified to near homogeneity from the tissue-culture medium. The relative molecular mass and high-affinity binding to dextran sulphate of secreted APP751 were consistent with that of PN-II. Functionally, secreted APP751 formed stable, non-covalent, inhibitory complexes with trypsin. Secreted APP695 did not form complexes with trypsin. We conclude that the secreted form of APP with the Kunitz protease inhibitor domain is PN-II.