The excessive generation and accumulation of 40- and 42-aa beta-amyloid peptides (Abeta40/Abeta42) in selectively vulnerable brain regions is a major neuropathological feature of Alzheimer's disease. Abeta, derived by proteolytic cleavage from the beta-amyloid precursor protein (betaAPP), is normally secreted. However, recent evidence suggests that significant levels of Abeta also may remain inside cells. Here, we have investigated the subcellular compartments within which distinct amyloid species are generated and the compartments from which they are secreted. Three experimental approaches were used: (i) immunofluorescence performed in intact cortical neurons; (ii) sucrose gradient fractionation performed with mouse neuroblastoma cells stably expressing wild-type betaAPP695 (N2a695); and (iii) cell-free reconstitution of Abeta generation and trafficking from N2a695 cells. These studies demonstrate that: (i) Abeta40 (Abeta1-40 plus Abetax-40, where x is an NH2-terminal truncation) is generated exclusively within the trans-Golgi Network (TGN) and packaged into post-TGN secretory vesicles; (ii) Abetax-42 is made and retained within the endoplasmic reticulum in an insoluble state; (iii) Abeta42 (Abeta1-42 plus Abetax-42) is made in the TGN and packaged into secretory vesicles; and (iv) the amyloid peptides formed in the TGN consist of two pools (a soluble population extractable with detergents and a detergent-insoluble form). The identification of the organelles in which distinct forms of Abeta are generated and from which they are secreted should facilitate the identification of the proteolytic enzymes responsible for their formation.