Alzheimer's disease (AD) involves activation of apoptotic pathways that may be regulated through signaling cascades initiated by the amyloid precursor protein (APP). Enlarged endosomes have been observed in postmortem AD brains at very early stages of the disease. We show here that exogenous expression of a familial AD (FAD) mutant of APP or of the APP binding protein APP-BP1 in neurons causes enlargement of early endosomes, increased receptor-mediated endocytosis via a pathway dependent on APP-BP1 binding to APP, and apoptosis. Levels of both APP-BP1 and Rab5 are elevated in early endosomes in cortical embryonic neurons expressing APP(V642I) or APP-BP1, in cultured skin fibroblast cells from Down syndrome subjects, and in postmortem hippocampal tissue of individuals with AD. Indeed, Rab5 was found to bind specifically to APP-BP1, between amino acids 443 and 479. Inhibition of Rab5 or dynamin activity, but not of Eps15 (epidermal growth factor receptor pathway substrate 15) activity, rescued neurons from apoptosis induced by either APP(V642I) or APP-BP1, without affecting levels of intracellular or secreted amyloid-beta (Abeta). Induction of Rab5 activity via expression of a constitutively active mutant led to an increase in neuronal apoptosis more than twice that attributable to induction of endosome enlargement via a Rab5-independent mechanism, regardless of Abeta production. Together, these findings suggest that Rab5 activation via an APP/APP-BP1-initiated signaling pathway mediates neuronal apoptosis caused by FAD mutants of APP and that, within this pathway, Rab5 has a specific role in signaling that is distinct from, although not independent of, its role in trafficking.