Accumulation of the cytotoxic 40- to 42-residue beta-amyloid peptide represents the primary pathological process in Alzheimer's disease (AD). BACE1 (beta-site APP cleaving enzyme 1) is responsible for the initial required step in the neuronal amyloidogenic processing of beta-amyloid precursor protein and is a major drug target for the therapeutic intervention of AD. In the present study, BACE1 is initially synthesized as an immature precursor protein containing part of the pre domain and the entire pro domain, and undergoes autocatalytic conversion to yield the well-folded mature BACE1 enzyme. To understand the mechanism of the conversion and the role of the pro domain, we monitored the autocatalytic conversion of BACE1 by heteronuclear NMR spectroscopy and used chemical shift perturbations as a probe to study the structural changes accompanying the autocatalytic conversion. NMR data revealed local conformational changes from a partially disordered to a well-folded conformation associated with the conversion. The conformational changes are largely concentrated in the NH(2)-terminal lobe. Conversely, the active site conformations are conserved during the autocatalytic conversion. The precursor and mature BACE1 proteins were further characterized for their ability to interact with a substrate-based transition state BACE1 peptide inhibitor. The precursor BACE1 rapidly adopted the bound conformation in the presence of the inhibitor, which is identical to the bound conformation of the mature protein. The interaction of the inhibitor with both the precursor BACE1 and the fully processed BACE1 is in slow exchange on the NMR time scale, indicating a tight binding interaction. Overall, the NMR data demonstrated that the pro domain does not hinder inhibitor binding and may assist in the proper folding of the protein. The fully processed BACE1 represents a high quality well-folded protein which is highly stable over a long period of time, and is suitable for evaluation of inhibitor binding by NMR for drug intervention.