In Alzheimer's disease, Down's syndrome, hereditary cerebral hemorrhage with amyloidosis of Dutch origin, and normal aging, amyloid accumulates in the brain parenchyma and blood vessels. The major protein in the deposits is the beta-protein, a 4-kD peptide possibly generated by an abnormal degradation of its precursor, the beta-protein precursor (beta PP). We found, as a second component of the brain amyloid, the serine protease inhibitor alpha 1-antichymotrypsin (ACT). Inasmuch as ACT is tightly associated with the beta-protein and is never found in other amyloidoses, we hypothesized a role for ACT in the degradation of the beta PP. We used synthetic peptides made according to the sequence flanking the N-terminus of the beta-protein to screen brain fractions for protease activity. After several purification steps, two protease fractions were found that can cleave the peptide between methionine and aspartic acid, aspartic acid being the N-terminus of the beta-protein. One protease is activated by calcium and inhibited by ACT, beta PP containing the Kunitz-type inhibitory domain, diisofluorophosphate, and 1,10-phenanthroline. This protease fraction is also able to degrade the beta PP in vitro. The second protease is a metal-dependent cysteine protease.