The regulated secretory pathway of neurons is the major source of extracellular A beta that accumulates in Alzheimer's disease (AD). Extracellular A beta secreted from that pathway is generated by beta-secretase processing of amyloid precursor protein (APP). Previously, cysteine protease activity was demonstrated as the major beta-secretase activity in regulated secretory vesicles of neuronal chromaffin cells. In this study, the representative cysteine protease activity in these secretory vesicles was purified and identified as cathepsin B by peptide sequencing. Immunoelectron microscopy demonstrated colocalization of cathepsin B with A beta in these vesicles. The selective cathepsin B inhibitor, CA074, blocked the conversion of endogenous APP to A beta in isolated regulated secretory vesicles. In chromaffin cells, CA074Me (a cell permeable form of CA074) reduced by about 50% the extracellular A beta released by the regulated secretory pathway, but CA074Me had no effect on A beta released by the constitutive pathway. Furthermore, CA074Me inhibited processing of APP into the COOH-terminal beta-secretase-like cleavage product. These results provide evidence for cathepsin B as a candidate beta-secretase in regulated secretory vesicles of neuronal chromaffin cells. These findings implicate cathepsin B as beta-secretase in the regulated secretory pathway of brain neurons, suggesting that inhibitors of cathepsin B may be considered as therapeutic agents to reduce A beta in AD.