This report describes the discovery and optimization of a BACE-1 inhibitor series containing an unusual acyl guanidine chemotype that was originally synthesized as part of a 6041-membered solid-phase library. The synthesis of multiple follow-up solid- and solution-phase libraries facilitated the optimization of the original micromolar hit into a single-digit nanomolar BACE-1 inhibitor in both radioligand binding and cell-based functional assay formats. The X-ray structure of representative inhibitors bound to BACE-1 revealed a number of key ligand:protein interactions, including a hydrogen bond between the side chain amide of flap residue Gln73 and the acyl guanidine carbonyl group, and a cation-π interaction between Arg235 and the isothiazole 4-methoxyphenyl substituent. Following subcutaneous administration in rats, an acyl guanidine inhibitor with single-digit nanomolar activity in cells afforded good plasma exposures and a dose-dependent reduction in plasma Aβ levels, but poor brain exposure was observed (likely due to Pgp-mediated efflux), and significant reductions in brain Aβ levels were not obtained.