A major pre-beta-amyloid protein695 (APP695) processing activity from Alzheimer's disease brain extracts was identified and found to be indistinguishable from the activity of cathepsin D.APP695 processing activity cleaved APP695 into a series of fragments that reacted on immunoblots to a monoclonal antibody (C286.8a) against beta-amyloid-(1-7)-peptide and cleaved N-dansyl-APP-(591-601)-amide at the Glu-Val and Met-Asp bonds. Fragments of 5.5 kDa and 10-12 kDa were formed from the cleavage of APP695 by cathepsin D at the Glu593-Val594 bond, and had the same N-terminus as a minor form of beta-amyloid released by cells. The Lys595-->Asn and Met596-->Leu substitutions found in a pedigree of familial Alzheimer's disease, increased the cathepsin D-catalyzed rate of accumulation of 5.5 kDa and 10-12 kDa C286.8a-reactive fragments 5-10fold. This substitution also increased the rate of N-dansyl-APP-(591-601)-amide cleavage at the Xaa-Asp bond by up to 41-fold. These observations suggest a role of cathepsin D in beta-amyloid formation under certain circumstances.