The design of a rational therapeutic approach to Alzheimer's disease ultimately depends on an understanding of its pathogenesis. Amyloid deposition is a well-established, but poorly understood concomitant of Alzheimer's disease. Advances in our knowledge of the normal posttranslational processing of the amyloid precursor protein may help to elucidate the defect in Alzheimer's disease that leads to amyloid deposition. In addition, recent insights into the biological and pathological effects of amyloid on CNS neurons promise to help clarify the role of this protein in the disease mechanism.