Abeta peptides, which are believed to be at the origin of Alzheimer's disease (AD), are produced through the sequential processing of the transmembrane amyloid precursor protein (APP) by the beta- and gamma-secretase. The identification of small molecules that penetrate the brain and inhibit these secretases is of great therapeutic potential. Here, we describe a cellular selection system in yeast for the identification of inhibitors of the human beta-secretase BACE-1. Similar to the natural situation in mammalian cells, BACE-1 and its substrate APP are bound to membranes in secretory pathway compartments. Yeast cells expressing these human proteins have been engineered so as to grow under selective conditions only upon reduction of BACE-1 activity, thus allowing identification of compounds that, in addition to inhibiting BACE-1, must permeate cellular membranes and present no cytotoxic effects. Our results show that gradual reduction of BACE-1 expression in the engineered yeast strain resulted in gradual increase of cell growth rate. Moreover, two validated BACE-1 inhibitors, which have IC50 values between 7 and 8 microM in mammalian cell assays, stimulated yeast growth in a concentration-dependent manner. This effect was specific for BACE-1 since these compounds had no effect on yeast cells expressing a different secretase cleaving the APP substrate at the alpha-site. The target-specific cellular assay presented here is applicable in high-throughput screens for selecting inhibitors of defined secretases acting on natural substrates in a membrane-bound protein configuration.