The amyloid protein, Abeta, which accumulates in the brains of Alzheimer patients, is derived by proteolysis of the amyloid protein precursor (APP). APP can undergo endoproteolytic processing at three sites, one at the amino terminus of the Abeta domain (beta-cleavage), one within the Abeta domain (alpha-cleavage), and one at the carboxyl terminus of the Abeta domain (gamma-cleavage). The enzymes responsible for these activities have not been unambiguously identified. By the use of gene disruption (knockout), we now demonstrate that TACE (tumor necrosis factor alpha converting enzyme), a member of the ADAM family (a disintegrin and metalloprotease-family) of proteases, plays a central role in regulated alpha-cleavage of APP. Our data suggest that TACE may be the alpha-secretase responsible for the majority of regulated alpha-cleavage in cultured cells. Furthermore, we show that inhibiting this enzyme affects both APP secretion and Abeta formation in cultured cells.