Lysosomal disturbances may be a contributing factor to Alzheimer's disease. We used novel compounds to test if suppression of the lysosomal protease cathepsin D blocks production of known precursors to neurofibrillary tangles. Partial lysosomal dysfunction was induced in cultured hippocampal slices with a selective inhibitor of cathepsins B and L. This led within 48 h to hyperphosphorylated tau protein fragments recognized by antibodies against human tangles. Potent nonpeptidic cathepsin D inhibitors developed using combinatorial chemistry and structure-based design blocked production of the fragments in a dose-dependent fashion. Threshold was in the submicromolar range, with higher concentrations producing complete suppression. The effects were selective and not accompanied by pathophysiology. Comparable results were obtained with three structurally distinct inhibitors. These results support the hypothesis that cathepsin D links lysosomal dysfunction to the etiology of Alzheimer's disease and suggest a new approach to treating the disease.