APP functions as a cell surface receptor and performs physiological functions on the surface of neurons relevant to neurite growth, neuronal adhesion and axonogenesis. It is involved in cell mobility and transcription regulation through protein-protein interactions.

Cleavage either by α-secretase, β-secretase or θ-secretase leads to generation and extracellular release of soluble APP peptides, sAPP-α and sAPP-β, and the retention of corresponding membrane-anchored C-terminal fragments, C80, C83 and C99. Subsequent processing of C80 and C83 by γ-secretase yields P3 peptides. This is the major secretory pathway and is non-amyloidogenic. Alternatively, presenilin/nicastrin-mediated γ-secretase processing of C99 releases the amyloid beta proteins, amyloid-beta 40 (Aβ40) and amyloid-beta 42 (Aβ42), major components of amyloid plaques, and the cytotoxic C-terminal fragments, gamma-CTF(50), gamma-CTF(57) and gamma-CTF(59). Many other minor β-amyloid peptides, β-amyloid 1-X peptides, are found in cerebral spinal fluid (CSF) including the β-amyloid X-15 peptides, produced from the cleavage by α-secretase and all terminating at Gln-686. It is proteolytically cleaved by caspases during neuronal apoptosis. Cleavage at Asp-739 by either caspase-6, -8, or -9 results in the production of the neurotoxic C31 peptide and the increased production of β-amyloid peptides.