Microglial cells and astrocytes are closely associated with nearly all compact deposits of the amyloid beta-protein found in the senile plaques characteristic of Alzheimer's disease and trisomy 21. The biosynthesis and metabolic fate of the beta-amyloid precursor protein (beta APP) in astrocytes has not been characterized, and its identification in microglia has not been described. Here, we report the expression of beta APP by astrocytes and microglia in primary cultures of cerebral cortex from newborn rats. Using metabolic labeling followed by immunoprecipitation, we show that both astrocytes and microglia express substantial amounts of the major isoforms of beta APP. This is confirmed by PCR-mediated amplification of the corresponding mRNAs, showing that all three major transcripts (beta APP695, beta APP751, and beta APP770) are present in relatively equal amounts. Despite rapid turnover of the precursor, astrocytes and microglia show a reduced production of soluble fragments of beta APP compared to cells transfected with beta APP cDNAs. The relative amount of soluble beta APP molecules generated is both cell type and isoform specific. Immunocytochemistry reveals that full-length beta APP is located in internal membranous vesicles, with only very little insertion at the cell surface. The latter data are in agreement with the reduced ability of microglia and astrocytes to cleave the beta APP into soluble derivatives. Our findings indicate that both astrocytes and microglia strongly express all three major forms of beta APP but apparently process these molecules by an alternative pathway that generates very small amounts of soluble beta APP. The immunocytochemical localization and the biochemical data lead to the suggestion that beta APP may not function principally as a cell surface or secreted protein in vivo but may have an important intracellular function.