Alzheimer disease-associated beta-amyloid peptide is generated from its precursor protein APP. By using the yeast two-hybrid assay, here we identified HtrA2/Omi, a stress-responsive chaperone-protease as a protein binding to the N-terminal cysteinerich region of APP. HtrA2 coimmunoprecipitates exclusively with immature APP from cell lysates as well as mouse brain extracts and degrades APP in vitro. A subpopulation of HtrA2 localizes to the cytosolic side of the endoplasmic reticulum (ER) membrane where it contributes to ER-associated degradation of APP together with the proteasome. Inhibition of the proteasome results in accumulation of retrotranslocated forms of APP and increased association of APP with HtrA2 and Derlin-1 in microsomal membranes. In cells lacking HtrA2, APP holoprotein is stabilized and accumulates in the early secretory pathway correlating with elevated levels of APP C-terminal fragments and increased Abeta secretion. Inhibition of ER-associated degradation (either HtrA2 or proteasome) promotes binding of APP to the COPII protein Sec23 suggesting enhanced trafficking of APP out of the ER. Based on these results we suggest a novel function for HtrA2 as a regulator of APP metabolism through ER-associated degradation.