Redox-active copper is implicated in the pathogenesis of Alzheimer disease (AD), beta-amyloid peptide (Abeta) aggregation, and amyloid formation. Abeta.copper complexes have been identified in AD and catalytically oxidize cholesterol and lipid to generate H2O2 and lipid peroxides. The site and mechanism of this abnormality is not known. Growing evidence suggests that amyloidogenic processing of the beta-amyloid precursor protein (APP) occurs in lipid rafts, membrane microdomains enriched in cholesterol. beta- and gamma-secretases, and Abeta have been identified in lipid rafts in cultured cells, human and rodent brains, but the role of copper in lipid raft amyloidogenic processing is presently unknown. In this study, we found that copper modulates flotillin-2 association with cholesterol-rich lipid raft domains, and consequently Abeta synthesis is attenuated via copper-mediated inhibition of APP endocytosis. We also found that total cellular copper is associated inversely with lipid raft copper levels, so that under intracellular copper deficiency conditions, Abeta.copper complexes are more likely to form. This explains the paradoxical hypermetallation of Abeta with copper under tissue copper deficiency conditions in AD.