ADAM10, a member of a disintegrin and metalloprotease family, is an alpha-secretase capable of anti-amyloidogenic proteolysis of the amyloid precursor protein. Here, we present evidence for genetic association of ADAM10 with Alzheimer's disease (AD) as well as two rare potentially disease-associated non-synonymous mutations, Q170H and R181G, in the ADAM10 prodomain. These mutations were found in 11 of 16 affected individuals (average onset age 69.5 years) from seven late-onset AD families. Each mutation was also found in one unaffected subject implying incomplete penetrance. Functionally, both mutations significantly attenuated alpha-secretase activity of ADAM10 (>70% decrease), and elevated Abeta levels (1.5-3.5-fold) in cell-based studies. In summary, we provide the first evidence of ADAM10 as a candidate AD susceptibility gene, and report two potentially pathogenic mutations with incomplete penetrance for late-onset familial AD.