The present invention is based on the findings that BACE2, a homolog of .beta.-secretase BACE, is able to stimulate processing of APP in a non-amyloidogenic pathway, thereby suppressing the level of A.beta.. Accordingly, the present invention provides methods and means for the identification and use of modulators of this unique activity of BACE2 to suppress A.beta. production. The compounds identified using the methods and means provided herein may be used as potential candidates for the treatment of Alzheimer's disease and other neurological diseases by reducing .beta.-amyloid deposit formation.