Memapsin 2 (beta-secretase) is the protease that initiates cleavage of amyloid precursor protein (APP) leading to the production of amyloid-beta (Abeta) peptide and the onset of Alzheimer's disease. Both APP and memapsin 2 are Type I transmembrane proteins and are endocytosed into endosomes where APP is cleaved by memapsin 2. Separate endocytic signals are located in the cytosolic domains of these proteins. We demonstrate here that the addition of the ectodomain of memapsin 2 (M2(ED)) to cells transfected with native APP or APP Swedish mutant (APPsw) resulted in the internalization of M2(ED) into endosomes with increased Abeta production. These effects were reduced by treatment with glycosylphosphatidylinositol-specific phospholipase C. The nontransfected parental cells had little internalization of M2(ED). The internalization of M2(ED) was dependent on the endocytosis signal in APP, because the expression of a mutant APP that lacks its endocytosis signal failed to support M2(ED) internalization. These results suggest that exogenously added M2(ED) interacts with the ectodomain of APP on the cell surface leading to the internalization of M2(ED), supported by fluorescence resonance energy transfer experiments. The interactions between the two proteins is not due to the binding of substrate APPsw to the active site of memapsin 2, because neither a potent active site binding inhibitor of memapsin 2 nor an antibody directed to the beta-secretase site of APPsw had an effect on the uptake of M2(ED). In addition, full-length memapsin 2 and APP, immunoprecipitated together from cell lysates, suggested that the interaction of these two proteins is part of the native cellular processes.