The aspartic protease beta-site amyloid precursor protein cleaving enzyme 1 (BACE1) mediates the production of the neurotoxic amyloid beta peptide and is therefore considered an important drug target for treatment of Alzheimer's disease. We describe a new homogeneous time-resolved fluorescence quenching assay for the identification of BACE1 inhibitors that is characterized by minimal compound interference and allows both kinetic and end-point measurements. A fluorescent Eu-chelate as fluorescent donor, coupled to the N-terminus of a peptide containing the amyloid precursor protein Swedish mutation with a quenching molecule at the C-terminus as acceptor, is used as substrate. Upon peptide cleavage by BACE1, the energy transfer between donor and acceptor molecules is interrupted, leading to increased fluorescence emission of the donor. Compound interference, a common problem in fluorescence assays, is minimized with this technology because of the large Stoke's shift and the time-resolved fluorescence emission of the Eu-chelate. The assay reproduced IC50 values of known inhibitors and detected them also as hits in a screening campaign. A high signal-to-noise ratio of 289 and a Z' factor of 0.76 make this assay suitable for high-throughput screening.