The majority of familial Alzheimer's disease cases have been attributed to mutations in the presenilin 1 (PSI) gene. PSI is synthesized as an inactive holoprotein that undergoes endoproteolytic processing to generate a functional N- and C-terminal heterodimer (NTF and CTF, respectively). We identified a single residue in PSI, Ser(397), which regulates the CTF levels in a population of dimer that has a rapid turnover. This residue is part of a highly conserved glycogen synthase kinase-3 beta (GSK-3 beta) consensus phosphorylation site within the loop domain of PSI. Site-directed mutagenesis at the Ser(397) position increased levels of PSI CTF but not NTF or holoprotein. Similar increases in only CTF levels were seen when cells expressing wild type PSI were treated with lithium chloride, an inhibitor of GSK-3 beta. Both wild type and PSI S397A CTF displayed a biphasic turnover, reflecting rapidly degraded and stable populations. Rapid turnover was delayed for mutant PSI S397A, causing increased CTF. These data demonstrate that PSI NTF-CTF endoproteolytic fragments are generated in excess, that phosphorylation at Ser(397) by GSK-3 beta regulates the discard of excess CTF, and that the disposal of surplus NTF is mediated by an independent mechanism. Overall, the results indicate that production of active NTF-CTF dimer is more complex than limited endoproteolysis of PSI holoprotein and instead involves additional regulatory events.