The main characteristic of Alzheimer's disease (AD) is brain deposition of the beta-amyloid (Abeta) peptide, generated endoproteolytically from Abeta precursor protein (APP) by beta- and gamma-secretases. A transmembrane aspartyl protease, beta-APP-cleaving enzyme (BACE1), was identified as beta-secretase. Although BACE1 cleaves APP at the beta-secretase site, the role of its homolog, beta-secretase 2 (BACE2) is poorly understood. We report the mRNA expression profile, DNA sequence, and molecular characterization of the BACE2 gene, located on chromosome 21q22.3. The BACE2 gene expresses more strongly in peripheral tissues, although BACE2 mRNA is found in the majority of brain regions, including the postcentral gyrus and temporal lobe. Characterization of 2932 bp of the BACE2 5'-flanking region (GC content of 55%), reveals the absence of canonical CCAAT and TATA boxes within 1 kb of the transcription start site (TSS). The sequence lacks significant internal repeats and has a housekeeping gene structure. Two active regions of the BACE2 promoter determine its basal expression and cell-type specificity. The proximal region (-31/+238) likely determines general basal expression, and the distal region (-2618/-1513), cell-type specificity. Several putative transcription factor sites, particularly SP1, Oct-1, and HES-1, are predicted to be within 1 kb of the TSS. On either side of the proximal promoter region, two negative regulatory domains might reduce BACE2 expression under an induced condition. The BACE2 5'-flanking region is likely to be highly regulated and expressed in a tissue type-specific manner.