The E693Delta mutation within the amyloid precursor protein (APP) has been suggested to cause dementia via the enhanced formation of synaptotoxic amyloid beta (Abeta) oligomers. However, this mutation markedly decreases Abeta secretion, implying the existence of an additional mechanism of neuronal dysfunction that is independent of extracellular Abeta. We therefore examined the effects of this mutation on both APP processing to produce Abeta as well as subcellular localization and accumulation of Abeta in transfected HEK293 and COS-7 cells. Both beta- and gamma-cleavage of mutant APP increased, indicating a lack of inhibition in Abeta production. Instead, this mutation promoted Abeta accumulation within cells, including the endoplasmic reticulum (ER), Golgi apparatus, early and late endosomes, lysosomes, and autophagosomes, all of which have been proposed as intracellular sites of Abeta generation and/or degradation, suggesting impairment of APP/Abeta trafficking. Notably, the intracellular mutant Abeta was found to predominantly form oligomers. Concomitant with this accumulation, the ER stress markers Grp78 and phosphorylated eIF2alpha were both strongly induced. Furthermore, the activation of caspase-4 and -3 as well as DNA fragmentation were detected in these cells. These results suggest that mutant Abeta induces alteration of Abeta trafficking and subsequent ER stress-induced apoptosis via enhancement of its intracellular oligomerization. Our findings suggest that Abeta oligomers exhibit toxicity in the extracellular space and within the cells themselves.