Mutations in the genes that encode the presenilin 1 and 2 (PS1 and PS2) proteins cause the majority of familial Alzheimer's disease (FAD). Differential cleavage of the presenilins results in a generation of at least two C-terminal fragments (CTFs). An increase in the smaller of these two CTFs is one of the few changes in presenilin processing associated with FAD mutations in both PS1 and PS2. Interestingly, the phosphorylation of PS2 modulates the production of the smaller, caspase-derived PS2 CTF, which indicates that the generation of this fragment is a regulated, physiologic event. To date, there is no data concerning the subcellular distribution of the caspase-derived PS2 CTF. Because this fragment is normally present at levels that are difficult to detect, we have used cell lines in which the production of wild-type or N141I mutant PS2 is controlled by a tetracycline-regulated promoter in order to assess the subcellular localization of the caspase CTF in relation to the larger, constitutive PS2 CTF and to PS2 holoprotein. We have found that when levels of PS2 are low, the constitutive CTF colocalizes with markers consistent with localization in the early Golgi-ER-Golgi intermediate compartment (ERGIC) while the caspase CTF colocalizes with markers for the endoplasmic reticulum (ER). Following induction of wild-type or mutant PS2, when the levels of PS2 are high, the primary localization of the constitutive CTF appears to shift from the early Golgi-ERGIC in addition to the ER. Interestingly, while the induction of wild-type PS2 resulted in the localization of the caspase CTF primarily in the ER, the induction of mutant PS2 resulted in the localization of the caspase CTF to both the ER and the early Golgi-ERGIC. In summary, these data suggest that the two presenilin 2 CTFs have different patterns of subcellular localization and that the N141I PS2 mutation alters the localization pattern of the PS2 caspase fragment.