The beta-amyloid peptide is a core component of the neuritic plaques that accumulate in Alzheimer's disease. Since the beta-peptide resides within a family of precursor proteins (APPs), proteolytic processing of APP is required for beta-amyloid deposition into plaques. Here, we have examined the role played by the calcium-dependent cysteine protease calpain I in APP processing. Immunoblotting with a specific APP antiserum was used to assess the in vitro degradation of rat brain APP, which appears as a triplet of polypeptides of Mr 110–130 kDa. Both soluble and membrane-bound APP were extraordinarily sensitive to activated calpain I. APP contains at least 3 distinct calpain I cleavage sites. The most protease-sensitive site was located within the highly acidic structural motif called the PEST domain, a second site was upstream of the putative N-linked glycosylation sites, and a third generated a 16 kDa carboxy-terminal fragment that contains the beta- peptide. Based on light microscopic immunohistochemistry, APP and calpain I were extensively colocalized within large numbers of neurons distributed throughout the rat brain, with especially high levels of each in neocortical layer 5, subiculum, globus pallidus, entopeduncular nucleus, anterodorsal and reticular thalamic nuclei, motor trigeminal nucleus, deep cerebellar nuclei, and Purkinje cells. Both antigens were most prevalent within neuronal perikarya. Intraventricular kainate infusion, which is known to cause rapid activation of hippocampal calpain I, produced a 32% decline in APP levels after 24 hr, suggestive of in vivo degradation of APP by calpain I. Following kainate-induced neuronal loss, both APP and calpain I immunoreactivities appeared in the surrounding reactive astroglia. These results indicate that calpain I may be involved in the normal and, perhaps, pathological processing of APP, and that this processing could occur in either neurons or reactive astrocytes. Calcium influx and calpain I activation may provide a mechanism by which excitatory neurotransmission regulates APP metabolism.