The beta-amyloid precursor protein (beta APP) is a membrane-spanning glycoprotein that is the source of the beta-amyloid peptide (beta AP) which accumulates as senile plaques in the brains of patients with Alzheimer's disease. beta APP is normally processed such that a cleavage occurs within the beta AP, liberating secreted forms of beta APP (APPss) from the cell. The neuronal functions of these forms are unknown. We now report that APPss have a potent neuroprotective action in cultured rat hippocampal and septal neurons and in human cortical neurons. APPs695 and APPs751 protected neurons against hypoglycemic damage, and the neuroprotection was abolished by antibodies to a specific region common to both APPs695 and APPs751. APPss caused a rapid and prolonged reduction in [Ca2+]i and prevented the rise in [Ca2+]i that normally mediated hypoglycemic damage. APPss also protected neurons against glutamate neurotoxicity, effectively raising the excitotoxic threshold. APPss may normally play excitoprotective and neuromodulatory roles. Alternative processing of APPss in Alzheimer's disease may contribute to neuronal degeneration by compromising the normal function of APPss and by promoting the deposition of beta AP.