The accumulation of amyloid-beta (Abeta) into plaques is a hallmark feature of Alzheimer's disease (AD). While amyloid precursor protein (APP)-related proteins are found in most organisms, only Abeta fragments from human APP have been shown to induce amyloid deposits and progressive neurodegeneration. Therefore, it was suggested that neurotoxic effects are a specific property of human Abeta. Here we show that Abeta fragments derived from the Drosophila orthologue APPL aggregate into intracellular fibrils, amyloid deposits, and cause age-dependent behavioral deficits and neurodegeneration. We also show that APPL can be cleaved by a novel fly beta-secretase-like enzyme. This suggests that Abeta-induced neurotoxicity is a conserved function of APP proteins whereby the lack of conservation in the primary sequence indicates that secondary structural aspects determine their pathogenesis. In addition, we found that the behavioral phenotypes precede extracellular amyloid deposit formation, supporting results that intracellular Abeta plays a key role in AD.