Alzheimer disease is characterized by the accumulation of abnormally folded protein fragments, i.e., amyloid beta peptide (Abeta) and tau that precipitate in amyloid plaques and neuronal tangles, respectively. In this review we discuss the complicated proteolytic pathways that are responsible for the generation and clearance of these fragments, and how disturbances in these pathways interact and provide a background for a novel understanding of Alzheimer disease as a multifactorial disorder. Recent insights evolve from the static view that the morphologically defined plaques and tangles are disease driving towards a more dynamic, biochemical view in which the intermediary soluble Abeta oligomers and soluble tau fragments are considered as the main mediators of neurotoxicity. The relevance of proteolytic pathways, centered on the generation and clearance of toxic Abeta, on the cleavage and nucleation of tau, and on the general proteostasis of the neurons, then becomes obvious. Blocking or stimulating these pathways provide, or have the potential to provide, interesting drug targets, which raises the hope that we will be able to provide a cure for this dreadful disorder.