Amyloid precursor proteins (APPs) and C-terminal fragments were colocalized with cysteine proteinase-like enzymes in purified rat brain clathrin-coated vesicles. Vesicular extracts degraded beta A4(12-28), yielding a product profile similar to that of purified rat brain cathepsin B. Cathepsin B degraded this peptide sequentially, with initial cleavage occurring at Val18-Phe19 and Phe19-Phe20 followed by release of dipeptides. Enzyme also hydrolyzed beta A4(1-40) at Phe19-Phe20 bond but at lower rates, likely due to aggregate formation. An octapeptide analogue of the domain adjacent to beta A4 (N-Ac-Val-Lys-Met-Asp-Ala-Glu-Phe-NH2) was also hydrolyzed by brain cathepsins B and L, and metalloendopeptidase 24.11. Enzymes acted at multiple sites, but only 24.11 cleaved the Met-Asp bond, thus resembling a proposed beta-secretase. Data imply that clathrin-coated vesicles contain cysteine-like proteinases capable of initiating the processing of APP or its fragments.