Numerous mutations causing early onset Alzheimer's disease have been identified in the presenilin (PS) genes, particularly the PS1 gene. Like the mutations identified within the beta-amyloid precursor protein gene, PS mutations cause the increased generation of a highly neurotoxic variant of amyloid beta-peptide. PS proteins are proteolytically processed to an N-terminal approximately 30-kDa (NTF) and a C-terminal approximately 20-kDa fragment (CTF20) that form a heterodimeric complex. We demonstrate that this complex is resistant to proteolytic degradation, whereas the full-length precursor is rapidly degraded. Degradation of the PS1 holoprotein is sensitive to inhibitors of the proteasome. Formation of a heterodimeric complex is required for the stability of both PS1 fragments, since fragments that do not co-immunoprecipitate with the PS complex are rapidly degraded by the proteasome. Mutant PS fragments not incorporated into the heterodimeric complex lose their pathological activity in abnormal amyloid beta-peptide generation even after inhibition of their proteolytic degradation. The PS1 heterodimeric complex can be attacked by proteinases of the caspase superfamily that generate an approximately 10-kDa proteolytic fragment (CTF10) from CTF20. CTF10 is rapidly degraded most likely by a calpain-like cysteine proteinase. From these data we conclude that PS1 metabolism is highly controlled by multiple proteolytic activities indicating that subtle changes in fragment generation/degradation might be important for Alzheimer's disease-associated pathology.