Amyloid beta-peptide is generated by two sequential proteolytic cleavages mediated by beta-secretase (BACE) and gamma-secretase. PACE was recently identified as a membrane-associated aspartyl protease. We have now analyzed the maturation and pro-peptide cleavage of BACE. Pulse-chase experiments revealed that BACE is posttranslationally modified during transport to the cell surface, which can be monitored by a significant increase in the molecular mass. The increase in molecular mass is caused by complex N-glycosylation. Treatment with tunicamycin and N-glycosidase F led to a PACE derivative with a molecular weight corresponding to an unmodified version. In contrast, the mature form of BACE was resistant to endoglycosidase Il treatment. The cytoplasmic tail of PACE was required for efficient maturation and trafficking through the Golgi; a BACE variant lacking the cytoplasmic tail undergoes inefficient maturation. In contrast a soluble BACE variant that does not contain a membrane anchor matured more rapidly than full-length BACE. Pro-BACE was predominantly located within the endoplasmic reticulum, Propeptide cleavage occurred immediately before full maturation and trafficking through the Golgi.