The 4-kDa beta-amyloid peptide (A beta), a major constituent of parenchymal amyloid deposits in Alzheimer's disease, is derived from larger amyloid precursor proteins (APP). We have examined the metabolism of APP in Madin-Darby canine kidney cells stably transfected with cDNA encoding either wild-type human APP-695 or human APP-695 that harbors the Swedish double mutation associated with familial early-onset Alzheimer's disease. Although approximately 90% of total soluble APP secreted from wild-type cells is secreted basolaterally following cleavage at the alpha-secretase site, soluble derivatives cleaved near or at the amino terminus of A beta (presumably the "beta-secretase" site) are preferentially secreted into the apical compartment of SWE cells. Concomitantly, levels of a specific A beta-containing carboxyl-terminal fragment are elevated in SWE cell lysates. Using domain-specific biotinylation and release assays, we failed to detect a beta-secretase-generated soluble derivative (APPs beta) released from the surface of SWE cells. However, APPs beta can be detected in SWE cell lysates, consistent with "beta-secretase" cleavage occurring in an intracellular compartment. Finally, we demonstrate that A beta is secreted into the basolateral compartment of SWE cells and that the majority of these A beta-related species contains an amino-terminal aspartate residue (+1).