mation. The actions of membrane-degrading acid hydrolases could also explain how the intramembrane portion of APP containing the C terminus of (3-amyloid becomes accessible to proteases.The formation of f8-amyloid in Alzheimer disease (AD) involves altered proteolytic processing of the amyloid precursor protein (APP), an .70-kDa transmembrane protein expressed in various cell types, including neural cells (1, 2). More than one abnormal hydrolytic event appears necessary to produce the -4-kDa ,B-amyloid peptide, including multiple atypical or abnormal proteolytic cleavages of APP. Generation of the N terminus of the P-amyloid peptide implies that a normal cleavage is precluded at residue 667 of 751-residue APP; normal cleavage forms the physiological polypeptide protease nexin-2 (3, 4). The C terminus of (3-amyloid is part of the intramembrane domain of APP, which normally would not be accessible to proteases. Its generation implies either proteolysis of APP molecules that are not inserted into the membrane or a cleavage that occurs after additional hydrolases have exposed the intramembrane domain ofAPP during membrane turnover or membrane injury (5).We recently showed (6-8) that the lysosomal proteases cathepsin B (CB) and cathepsin D (CD) in AD brain are present extracellularly in senile plaques at high levels. To identify the source of extracellular cathepsins and to investigate the involvement of other lysosomal hydrolases in f-amyloid formation, we studied the cellular and subcellular distribution of a series of proteolytic and nonproteolytic lysosomal enzymes, using enzyme histochemistry and immunocytochemistry at the light and electron microscopic levels. Our findings show that many classes of lysosomal hydrolases are abnormally localized extracellularly in relation to the deposits of (-amyloid in AD brain, and these enzymes originate principally from degenerating neurons.