The cerebral deposition of amyloid beta-peptide is an early and critical feature of Alzheimer's disease. Amyloid beta-peptide is released from the amyloid precursor protein by the sequential action of two proteases, beta-secretase and gamma-secretase, and these proteases are prime targets for therapeutic intervention. We have recently cloned a novel aspartic protease, BACE, with all the known properties of beta-secretase. Here we demonstrate that BACE is an N-glycosylated integral membrane protein that undergoes constitutive N-terminal processing in the Golgi apparatus. We have used a secreted Fc fusion-form of BACE (BACE-IgG) that contains the entire ectodomain for a detailed analysis of posttranslational modifications. This molecule starts at Glu(46) and contains four N-glycosylation sites (Asn(153), Asn(172), Asn(223), and Asn(354)). The six Cys residues in the ectodomain form three intramolecular disulfide linkages (Cys(216)-Cys(420), Cys(278)-Cys(443), and Cys(330)-Cys(380)). Despite the conservation of the active site residues and the 30-37% amino acid homology with known aspartic proteases, the disulfide motif is fundamentally different from that of other aspartic proteases. This difference may affect the substrate specificity of the enzyme. Taken together, both the presence of a transmembrane domain and the unusual disulfide bond structure lead us to conclude that BACE is an atypical pepsin family member.