Human bleomycin hydrolase (hBH) is a neutral cysteine protease that may regulate the secretion of soluble amyloid precursor protein (APP) and amyloid beta (A beta), which is a major constituent of the Alzheimer's disease-associated amyloid plaques. We have now determined that APP interacts with hBH by using yeast two hybrid methods and in vitro binding studies revealed that APP interacted with a 68 amino acid region that includes the catalytic domain of hBH. Ectopic expression of hBH increased the secretion of A beta but not of a second secreted protein, apolipoprotein A-I. Expression of hBH in which the catalytic cysteine 73 was mutated to serine failed to increase A beta secretion. These results indicate a critical role for cysteine 73 of hBH in mediating APP processing.