The majority of familial Alzheimer disease mutations are linked to the recently cloned presenilin (PS) genes, which encode two highly homologous proteins (PS-1 and PS-2). It was shown that the full-length PS-2 protein is phosphorylated constitutively within its N-terminal domain by casein kinases, whereas the PS-1 protein is not. Full-length PS proteins undergo endoproteolytic cleavage within their hydrophilic loop domain resulting in the formation of approximately 20-kDa C-terminal fragments (CTF) and approximately 30-kDa N-terminal fragments [Thinakaran, G., et al. (1996) Neuron 17, 181-190]. Here we describe the surprising finding that the CTF of PS-1 is phosphorylated by protein kinase C (PKC). Stimulation of PKC causes a 4- to 5-fold increase of the phosphorylation of the approximately 20-kDa CTF of PS-1 resulting in reduced mobility in SDS gels. PKC-stimulated phosphorylation occurs predominantly on serine residues and can be induced either by direct stimulation of PKC with phorbol-12,13-dibutyrate or by activation of the m1 acetylcholine receptor-signaling pathway with the muscarinic agonist carbachol. However, phosphorylation of full-length PS-1 and PS-2 is not altered upon PKC stimulation. In addition, a mutant form of PS-1 lacking exon 10, which does not undergo endoproteolytic cleavage [Thinakaran, G., et al. (1996) Neuron 17, 181-190] is not phosphorylated by PKC, although it still contains all PKC phosphorylation sites conserved between different species. These results show that PKC phosphorylates the PS-1 CTF. Therefore, endoproteolytic cleavage of full-length PS-1 results in the generation of an in vivo substrate for PKC. The selective phosphorylation of the PS-1 CTF indicates that the physiological and/or pathological properties of the CTF are regulated by PKC activity.