Secretory proteins frequently aggregate into non-soluble dense-core granules (DCGs) in recycling endosome-like compartments prior to release. By contrast, aberrantly processed Aβ-peptides derived from Amyloid Precursor Protein (APP) form pathological amyloidogenic aggregations in late-stage Alzheimer's Disease (AD) after secretion. By examining living Drosophila prostate-like secondary cells, we show both APP and Aβ-peptides affect normal DCG biogenesis. These cells generate DCGs and secreted nanovesicles called Rab11-exosomes within enlarged recycling endosomes. The fly APP homologue, APP-like (APPL), associates with Rab11-exosomes and the compartmental limiting membrane, from where its extracellular domain controls protein aggregation. Proteolytic release of this membrane-associated domain permits aggregates to coalesce into a large central DCG. Mutant Aβ-peptide expression, like Appl loss-of-function, disrupts this assembly step and compartment motility, and increases lysosomal targeting, mirroring pathological events reported in early-stage AD. Our data therefore reveal a physiological role for APP in membrane-dependent protein aggregation, which when disrupted, rapidly triggers AD-relevant intracellular pathologies.