Amyloid-beta precursor protein (APP), a type I membrane protein, is physiologically processed by alpha- or beta-secretases that cleave APP N-terminal to the transmembrane region. Extracellular alpha-/beta-cleavage of APP generates a large secreted N-terminal fragment, and a smaller cellular C-terminal fragment. Subsequent gamma-secretase cleavage in the transmembrane region of the C-terminal fragment induces secretion of small extracellular peptides, including Abeta40 and Abeta42, which are instrumental in the pathogenesis of Alzheimer's disease, and intracellular release of a cytoplasmic tail fragment. Although APP resembles a cell-surface receptor, no functionally active extracellular ligand for APP that might regulate its proteolytic processing has been described. We now show that F-spondin, a secreted signaling molecule implicated in neuronal development and repair, binds to the conserved central extracellular domain of APP and inhibits beta-secretase cleavage of APP. Our data indicate that F-spondin may be an endogenous regulator of APP cleavage, and suggest that the extracellular domains of APP are potential drug targets for interfering with beta-secretase cleavage.