Increasing evidence links intraneuronal beta-amyloid (Abeta42) accumulation with the pathogenesis of Alzheimer's disease (AD). In Abeta precursor protein (APP) mutant transgenic mice and in human AD brain, progressive intraneuronal accumulation of Abeta42 occurs especially in multivesicular bodies (MVBs). We hypothesized that this impairs the MVB sorting pathway. We used the trafficking of the epidermal growth factor receptor (EGFR) and TrkB receptor to investigate the MVB sorting pathway in cultured neurons. We report that, during EGF stimulation, APP mutant neurons demonstrated impaired inactivation, degradation, and ubiquitination of EGFR. EGFR degradation is dependent on translocation from MVB outer to inner membranes, which is regulated by the ubiquitin-proteasome system (UPS). We provide evidence that Abeta accumulation in APP mutant neurons inhibits the activities of the proteasome and deubiquitinating enzymes. These data suggest a mechanism whereby Abeta accumulation in neurons impairs the MVB sorting pathway via the UPS in AD.