Amyloid precursor protein (APP) and iron both play pivotal roles in the central nervous system, but whether and how iron influences the processing of endogenous APP in neurons remain unclear. Here, we investigated the regulatory effects and underlying mechanisms of iron on non-amyloidogenic and amyloidogenic processing of APP in rat primary cortical neurons. Treatment of the neurons with ferric ammonium citrate (FAC, 100 μmol/L) markedly facilitated the non-amyloidogenic processing of APP, as evidenced by a robust increase in α-secretase-derived carboxy-terminal fragment α (CTFα). Furthermore, the distribution of sAPPα was altered after iron treatment, and sAPPα remained in the cellular lysates instead of being secreted into the extracellular milieu. Moreover, the levels of APP amyloidogenic products, including sAPPβ and Aβ were both decreased. We further revealed that FAC did not alter the expression of β-secretase, but significantly suppressed its enzymatic activity in iron-treated neurons. In a cell-free β-secretase activity assay, FAC dose-dependently inhibited the activity of purified β-secretase with an IC50 value of 21.67 μmol/L. Our data provide the first evidence that iron overload alters the neuronal sAPPα distribution and directly inhibits β-secretase activity. These findings shed light on the regulatory mechanism of bio-metals on APP processing.