The principal component of Alzheimer's amyloid plaques, Abeta, derives from proteolytic processing of the Alzheimer's amyloid protein precursor (APP). FE65 is a brain-enriched protein that binds to APP. Although several laboratories have characterized the APP-FE65 interaction in vitro, the possible relevance of this interaction to Alzheimer's disease has remained unclear. We demonstrate here that APP and FE65 co-localize in the endoplasmic reticulum/Golgi and possibly in endosomes. Moreover, FE65 increases translocation of APP to the cell surface, as well as both alphaAPPs and Abeta secretion. The dramatic (4-fold) FE65-dependent increase in Abeta secretion suggests that agents which inhibit the interaction of FE65 with APP might reduce Abeta secretion in the brain and therefore be useful for preventing or slowing amyloid plaque formation.