Sequential processing of the transmembrane amyloid precursor protein (APP) by the beta-secretase BACE and by the gamma-secretase causes secretion of Abeta peptides. Extracellular aggregation of these peptides in the brain is a major hallmark of Alzheimer's disease. For therapeutic purposes and the development of specific inhibitors, it is important to characterize these secretases. We have established a cellular growth selection system for functional expression of human BACE in the yeast Saccharomyces cerevisiae. A fragment of APP bearing the beta-site, the transmembrane domain and the cytosolic tail was fused to the C-terminus of the yeast enzyme invertase, which is normally secreted to allow cell growth in the presence of sucrose as the sole carbon source. The resulting invertase-APP fusion protein was expressed as a type-I transmembrane protein in intracellular compartments of yeast cells lacking endogenous invertase. In these cells, co-expression of human BACE restored cell growth on selective plates upon cleavage of the invertase-APP fusion protein. The cellular growth selection system presented here can be generally applied to screen for secretases that specifically cleave membrane-bound substrates. Furthermore, this system provides the basis for a high-throughput screen for identifying secretase inhibitors that are active in eukaryotic cells.