Amyloid plaques, hallmark neuropathological lesions in Alzheimers disease (AD) brain, are composed of the β-amyloid peptide (Aβ). Much evidence suggests that Aβ is central to the pathophysiology of AD and is likely to play an early role in this intractable neurodegenerative disorder. Given the strong correlation between Aβ and AD, therapeutic strategies to lower cerebral Aβ levels should prove beneficial for AD treatment. Aβ is derived from amyloid precursor protein (APP) via cleavage by two proteases, β- and γ-secretase. The β-secretase has been identified as a novel aspartic protease named BACE1 (β-site APP Cleaving Enzyme 1) that initiates Aβ formation. Importantly, BACE1 appears to be dysregulated in AD. As the rate-limiting enzyme in Aβ generation, BACE1, in principle, is an excellent therapeutic target for strategies to reduce the production of Aβ in AD. While BACE1 knockout (BACE1-/-) mice have been instrumental in validating BACE1 as the authentic β-secretase in vivo, data indicates that complete abolishment of BACE1 may be associated with specific behavioral and physiological alterations. Recently a number of non-APP BACE1 substrates have been identified. It is plausible that failure to process certain BACE1 substrates may underlie some of the reported abnormalities in the BACE1-/- mice. Here we review the basic biology of BACE1, focusing on the regulation, structure and function of this enzyme. We pay special attention to the putative function of BACE1 during normal conditions and discuss in detail the relationship that exists between key risk factors for AD and the pathogenic alterations in BACE1 that are observed in the diseased state.