BACE2 (Memapsin 1) is a membrane-bound aspartic protease that is highly homologous with BACE1 (Memapsin 2). While BACE1 processes the amyloid precursor protein (APP) at a key step in generating the beta-amyloid peptide and presumably causes Alzheimer's disease (AD), BACE2 has not been demonstrated to be directly involved in APP processing, and its physiological functions remain to be determined. In vivo, BACE2 is expressed as a precursor protein containing pre-, pro-, protease, transmembrane, and cytosolic domains/peptides. To determine the enzymatic properties of BACE2, two variants of its pro-protease domain, pro-BACE2-T1 (PB2-T1) and pro-BACE2-T2 (PB2-T2), were constructed. They have been expressed in Escherichia coli as inclusion bodies, refolded and purified. These two recombinant proteins have the same N terminus but differ at their C-terminal ends: PB2-T1 ends at Pro466, on the boundary of the postulated transmembrane domain, and PB2-T2 ends at Ser431, close to the homologous ends of other aspartic proteases such as pepsin. While PB2-T1 shares similar substrate specificities with BACE1 and other 'general' aspartic proteases, the specificity of PB2-T2 is more constrained, apparently preferring to cleave at the NH2-terminal side of paired basic residues. Unlike other 'typical' aspartic proteases, which are active only under acidic conditions, the recombinant BACE2, PB2-T1, was active at a broad pH range. In addition, pro-BACE2 can be processed at its in vivo maturation site by BACE1.