Neprilysin (NEP) is a rate-limiting amyloid beta peptide (Abeta)-degrading enzyme in the brain. We demonstrated previously that overexpression of neprilysin in primary cortical neurons remarkably decreased not only extracellular but also intracellular Abeta levels. To investigate the subcellular compartments where neprilysin degrades Abeta most efficiently, we expressed neprilysin chimeric proteins containing various subcellular compartment-targeting domains in neurons. Sec12-NEP, beta-galactoside alpha2,6-sialyltransferase-NEP, transferrin receptor-NEP, and growth-associated protein 43-NEP were successfully sorted to the endoplasmic reticulum, trans-Golgi network, early/recycling endosomes, and lipid rafts, respectively. We found that intracellularly, wild-type neprilysin and all the chimeras showed equivalent Abeta40-degrading activities. Abeta40 was more effectively cleared than Abeta42, and this tendency was greater for intracellular Abeta than for extracellular Abeta. Wild-type and trans-Golgi network-targeted ST-NEP cleared more intracellular Abeta42 than the other chimeras. Wild-type neprilysin cleared extracellular Abeta more effectively than any of the chimeras, among which endoplasmic reticulum-targeted Sec12-NEP was the least effective. These observations indicate that different intracellular compartments may be involved in the metabolism of distinct pools of Abeta (Abeta40 and Abeta42) to be retained or recycled intracellularly and to be secreted extracellularly, and that the endogenous targeting signal in wild-type neprilysin is well optimized for the overall neuronal clearance of Abeta.