Disruption of endosome-mediated trafficking and signaling of nerve growth factor (NGF)is believed to contribute prominently to atrophy and degeneration of basal forebrain cholinergic neurons(BFCNs)in Alzheimers disease(AD)and Down syndrome(DS).However,the mechanism by which altered processing of amyloid precursor protein(APP)in AD or increased APP expression in DS leads to endosomal dysfunction remains unclear.Here,we show that Rab5-positive endosomes are increased both in number and size in BFCN cultures derived from a mouse model of DS,Ts65Dn.To further dissect the molecular and cellular pathways by which Rab5 function isdysregulated by excessive APP or changes in APP processing,we examined the effect of various APP constructs on the activity of Rab5 and the size of Rab5-positive endosomes.While expression of either the APP intracellular cytoplasmic domain(AICD)or the ?-C-terminal fragment(?-CTF)of APP had no appreciable effects,the full length wild type APP(APPwt),or the APP Swedish mutant(APPSWE),or the β-CTF of APP induced an increase in activation of Rab5 and caused enlargement of Rab5-endosomes in rat BFCNs.Expression of these constructs disrupted NGF signaling and NGF-induced differentiation in PC12 cells.We further demonstrate that β-CTF impaired retrograde axonal trafficking of NGF andinduced significant atrophy of rat BFCNs.Significantly,the effect of ?-CTF on BFCN atrophy was rescued by co-expression of the dominant negative Rab5 mutant,Rab5S34N.Taken together,these data indicate that excessive APP and,in particular,increased β-CTF impair NGF trafficking and signaling by inducing hyper-activated Rab5.These results are some of the first to describe a potential mechanism to explain BFCN degeneration in AD and DS.