Phorbol esters, activators of protein kinase C (PKC), regulate the relative utilization of alternative processing pathways for the Alzheimer beta-amyloid precursor protein (beta-APP) in intact cells, increasing the production of nonamyloidogenic soluble beta-APP (s beta-APP) and decreasing that of neurotoxic beta-amyloid (A beta) peptide. The molecular and cellular bases of PKC-regulated beta-APP cleavage are poorly understood. Here we demonstrate in a reconstituted cell-free system that activation of endogenous PKC increases formation from the trans-Golgi network of secretory vesicles containing beta-APP and that this effect can be mimicked by purified PKC. The results demonstrate directly that PKC is involved in regulation of secretory vesicle formation and provide a mechanism by which PKC may reduce the formation of the A beta peptide characteristic of Alzheimer disease.