In this combined bioinformatics, molecular dynamics (MID), and density functional theory study, mechanisms for the hydrolytic cleavage of Val-IIe and Ala-Thr peptide bonds of amyloid precursor protein by the intramembrane aspartyl protease presenilin 1 (PS1) have been elucidated. These processes lead to the formation of 40-42 amino acids long Alzheimer amyloid beta (A beta) peptides (A beta 40 and A beta 42, respectively). In the absence of an X-ray structure of PS1, based on the substrate specificity and structural characteristics of the active site, another aspartyl protease BACE1 was selected as a model for PS1. The general acid/base mechanism utilized by PSI is divided into the following two steps: (1) formation of the gem-diol intermediate, and (2) cleavage of the Val-Ile or Ala-Thr peptide bond. The MD simulations indicate that the electronic nature of the cleavage site (Val-Ile and Ala-Thr) plays a critical role in the formation of the enzyme-substrate complex. The calculated barrier (at B3LYP level) for the generation of the gem-diol intermediate in the Val-Ile and Ala-Thr peptide bond cleaving pathways is 16.6 and 24.4 kcal/mol, respectively, and it is endothermic by 6.2 and 17.4 kcal/mol, respectively. This step is the rate-limiting step in both reactions. In the second step, the splitting of the Val-Ile and Ala-Thr bonds encounters the barrier of 10.9 and 21.3 kcal/mol, respectively. The computed energetics exhibit that, in comparison to A beta 42, the generation of A beta 40 is more favorable and supports the experimental observation that the production of A beta 40 is 9 times greater than that of A beta 42.