Amyloid beta (Abeta) is a metabolic product of Abeta precursor protein (APP). Deposition of Abeta in the brain and neuronal degeneration are characteristic hallmarks of Alzheimer's disease (AD). Abeta induces neuronal degeneration, but the mechanism of neurotoxicity remains elusive. Increasing evidence implicates APP as a receptor-like protein for Abeta fibrils (fAbeta). In this study, we present further experimental support for the direct interaction of APP with fAbeta and for its involvement in Abeta neurotoxicity. Using recombinant purified holo-APP (h-APP), we have shown that it directly binds fAbeta. Employing deletion mutant forms of APP, we show that two different sequences are involved in the binding of APP to fAbeta. One sequence in the n-terminus of APP is required for binding of fAbeta to secreted APP (s-APP) but not to h-APP. In addition, the extracellular juxtamembrane Abeta-sequence mediates binding of fAbeta to h-APP but not to s-APP. Deletion of the extracellular juxtamembrane Abeta sequence abolishes abnormal h-APP accumulation and toxicity induced by fAbeta deposition, whereas deletions in the n-terminus of APP do not affect Abeta toxicity. These experiments show that interaction of toxic Abeta species with its membrane-anchored parental protein promotes toxicity in hippocampal neurons, adding further support to an Abeta-receptor-like function of APP directly implicated in neuronal degeneration in AD.