Tumor necrosis factor-alpha (TNFalpha) is a proinflammatory cytokine that is elevated in Alzheimer's disease (AD) brains. Because TNFalpha is released from cell membranes by the TNFalpha-converting enzyme (TACE), inhibition of TACE has the potential to mitigate TNFalpha effects in AD brain. TACE also cleaves amyloid precursor protein (APP) and generates sAPPalpha, precluding the formation of potentially harmful amyloid beta (Abeta) peptides by beta-site APP cleaving enzymes (BACE). Hence, the anti-inflammatory benefits of TACE inhibition might be offset by an increase in Abeta. We have examined the effects of the highly selective TACE inhibitor, BMS-561392, on APP processing in vitro and in vivo. In Chinese hamster ovary cells expressing APP, BMS-561392 significantly reduced secretion of sAPPalpha without a corresponding increase in Abeta production. Conversely, a BACE inhibitor decreased sAPPbeta and Abeta peptides with no change in the secretion of sAPPalpha. These data indicate an absence of TACE and BACE competition for the APP substrate. Despite this, we observed competition for APP when TACE activity was enhanced via phorbol ester treatment or if APP was modified such that it was retained within the trans-Golgi network (TGN). These results suggest that BACE and TACE share a common TGN localization, but under normal conditions do not compete for APP. To confirm this finding in vivo, BMS-561392 was infused into the brains of Tg2576 and wild-type mice. Although decreased brain sAPPalpha levels were observed, steady-state Abeta levels were not significantly changed. Accordingly, it is possible that TACE inhibitors could reduce TNFalpha levels without increasing Abeta levels within the AD brain.