Alzheimer's disease (AD), the leading cause of dementia worldwide, is characterized by the accumulation of the β-amyloid peptide (Aβ) within the brain along with hyperphosphorylated and cleaved forms of the microtubule-associated protein tau. Genetic, biochemical, and behavioral research suggest that physiologic generation of the neurotoxic Aβ peptide from sequential amyloid precursor protein (APP) proteolysis is the crucial step in the development of AD. APP is a single-pass transmembrane protein expressed at high levels in the brain and metabolized in a rapid and highly complex fashion by a series of sequential proteases, including the intramembranous γ-secretase complex, which also process other key regulatory molecules. Why Aβ accumulates in the brains of elderly individuals is unclear but could relate to changes in APP metabolism or Aβ elimination. Lessons learned from biochemical and genetic studies of APP processing will be crucial to the development of therapeutic targets to treat AD.