Understanding the pathway for amyloid percursor protein (APP) catabolism has become an important line of investigation. APP is a ubiquitous membrane bound protein that is rapidly cleaved at the membrane, yielding a secreted protein identical to protease nexin II and an internalized 11.5 kDa 100 residue C terminal derivative (CTD). The levels of CTDs in a variety of cell lines have been examined and were found to differ. Cell types associated with the pathology of Alzheimer's disease (AD), such as olfactory neuroblasts (ON) and cortical vascular endothelial cells, have higher levels of CTDs than lymphoblasts and melanoma cells. The mechanism of CTD catabolism appears to involve the lysosome because blockade of lysosomal but not endosomal or mitochondrial function results in increased levels of CTDs. Under these conditions, production of larger, amyloidogenic CTDs is also seen. In cells possessing higher levels of CTDs we find that the mechanism for production of amyloidogenic CTDs may involve the internalization of intact full-length APP. Thus, inhibition of the lysosomal system appears capable of generating amyloidogenic peptides. The amount of amyloidogenic peptides appears to vary among cell lines. Such variation may shed light on why amyloid accumulates around specific cell types such as vascular endothelial cells, neurons, and glia. Finally, disfunction of the lysosomal system may play a role in the pathogenesis of Alzheimer's disease.