The cleavage of APP by BACE initiates the amyloidogenic process in Alzheimer's disease (AD). We have generated transgenic mice expressing BACE and double transgenic mice expressing BACE and the Swedish mutations of APP (SwAPP) in neurons. BACE transgenic mice did not develop beta-amyloid plaques by age of 14 months, but showed intracellular beta-amyloid immunoreactivity that was co-localized with transgenic BACE in neurons. Abeta levels were increased and AD-like pathology was accelerated in double transgenic mice expressing both BACE and SwAPP. At two months of age, early signs of extracellular Abeta deposition and reactive astrocytes were found in double transgenic, but not in single transgenic mice. Furthermore, at four months, well defined beta-amyloid deposits surrounded by activated astrocytes could be detected in the double transgenic mice. We suggest that BACE overexpression is not sufficient to produce beta-amyloid plaques, but simultaneous expression of BACE and its substrate (SwAPP) leads to an accelerated amyloid plaque formation.