Amyloid deposits in the brains of patients with Alzheimer's disease (AD) contain a protein (beta A4) which is abnormally cleaved from a larger transmembrane precursor protein (APP). APP is believed to be normally released from membranes by the action of a protease referred to as APP secretase. Amyloid deposits have also been shown to contain the enzyme acetylcholinesterase (AChE). In this study, a protease activity associated with AChE was found to possess APP secretase activity, stimulating the release of a soluble 100K form of APP from HeLa cells transfected with an APP cDNA. The AChE-associated protease was strongly and specifically inhibited by soluble APP (10 nM) isolated from human brain. The AChE-associated protease cleaved a synthetic beta A4 peptide at the predicted cleavage site. As AChE is decreased in AD, a deficiency of its associated protease might explain why APP is abnormally processed in AD.