The extracellular domain of transmembrane Abeta amyloid precursor protein (APP) has a Cu(II) reducing activity upon Cu(II) binding associated with the formation of a new disulfide bridge. The complete assignment of the disulfide bond revealed the involvement of cysteines 144 and 158 around copper-binding histidine residues. The vulnerability of APP-Cu(I) complexes to reactive oxygen species was elaborated as a site-specific and random fragmentation of APP in a time-dependent manner and at low concentrations of H2O2. Analysis of the specific reaction revealed the generation of C-terminal polypeptides, containing the Abeta domain. APP catalyzed the reduction of H2O2 and oxidation of Cu(I) to Cu(II) in a "peroxidative" reaction in vitro. The resulting bound copper-hydroxyl radical intermediate [APP-Cu(II)(.OH)] then likely participated in a Fenton type of reaction with radical formation as a prerequisite for protein degradation. Evidence from two observations suggests that the reaction takes place in two phases. Bathocuproine, a trapping agent for Cu(I), abolished the initial fragmentation, and chelation of Cu(II) by DTPA (diethylenetriaminepentaacetic acid) interrupted the reaction cascade induced by H2O2 at later stages. Consequently, the results suggest that a cytotoxic gain-of-function of APP-Cu(I) complexes might result in a perturbation of free radical homeostasis. What significance such a perturbation may have for the pathogenesis of Alzheimer's disease remains to be determined.