The formation of βA4 amyloid in the brains of individuals with Alzheimer's disease requires the proteolytic cleavage of amyloid precursor protein. Several lines of evidence suggest that cathepsin D, the major lysosomal/endosomal aspartic protease, may be involved in this process. In this work, we used a sensitive in vitro method of detection to investigate the role of cathepasin D in the proteolytic processing of a 100-amino acid C-terminal fragment (C100) inclusive of βA4 and cytoplasmic domain of APP. Digestion of C100 with cathepsin D resulted in cleavage at the amyloidogenic γ-cleavage sites. This occurred preferentially at Thr43–Val44 and at Ala42–Thr43, generating full length βA4 43 and βA4 42 amyloid peptides, respectively. Cathepsin D was also found to cleave the substrate at the following nonamyloidogenic sites; Leu34–Met35, Thr48–Leu49 and Leu49–Val50. A high concentration of cathepsin D resulted in cleavage also occurring at Phe19–Phe20, Phe20–Ala21 and Phe93–Phe94 of the C100, suggesting that these sites are somewhat less sensitive to the action of cathepsin D. Digestion of C100 using different solublizing agents indicated that the cleavage of C100 by cathepsin D is greatly influenced by the structural integrity of the substrate. However, our results suggest that cathepsin D could generate the pathogenic βA4 amyloid peptides from its precursor in vitro, which may indicate a role in the amyloidogenesis of Alzheimer's disease.