Alzheimer's disease (AD) is a neurodegenerative disorder involving the florid deposition of vascular and cerebral plaques composed chiefly of amyloid beta-peptide (A beta) derived from cleavage of the amyloid precursor protein (APP). Varying in length from 39 to 43 amino acids, A beta, particularly the longer A beta(42), is thought to play a significant role in AD pathogenesis. To better understand AD it is important to identify the subcellular organelles generating A beta. Studies using agents that disrupt endosomal/lysosomal function suggest that A beta is generated late in the secretory and endocytic pathways. However, much of what is known about A beta biosynthesis has been inferred by monitoring extracellular A beta levels since intracellular A beta is undetectable in most cell types. Consequently, the precise site or sites that generate A beta, or whether A beta(1-40) and A beta(1-42) are generated at the same point in the biosynthetic pathway, is not known. Using human NT2N neurons, we found that retention of APP in the endoplasmic reticulum/intermediate compartment (ER/IC) by three independent approaches eliminated production of intracellular A beta(1-40), but did not alter intracellular A beta(1-42) synthesis. These findings suggest that the ER/IC may be an important site for generating this highly amyloidogenic species of A beta.