Neurotrophins are trophic factors that regulate important neuronal functions. They bind two unrelated receptors, the Trk family of receptor-tyrosine kinases and the p75 neurotrophin receptor (p75). p75 was recently identified as a new substrate for ␥-secretase-mediated intramembrane proteolysis, generating a p75-derived intracellular domain (p75-ICD) with signaling capabilities. Using PC12 cells as a model, we studied how neurotrophins activate p75 processing and where these events occur in the cell. We demonstrate that activation of the TrkA receptor upon binding of nerve growth factor (NGF) regulates the metalloprotease-mediated shedding of p75 leaving a membranebound p75 C-terminal fragment (p75-CTF). Using subcellular fractionation to isolate a highly purified endosomal fraction, we demonstrate that p75-CTF ends up in endosomes where ␥-secretase-mediated p75-CTF cleavage occurs, resulting in the release of a p75-ICD. Moreover, we show similar structural requirements for ␥-secretase processing of p75 and amyloid precursor protein-derived CTFs. Thus, NGF-induced endocytosis regulates both signaling and proteolytic processing of p75.Neurotrophins belong to a small family of neurotrophic factors that include nerve growth factor (NGF), 4 brain-derived neurotrophic factor (BDNF), neurotrophin-3 (NT3), and neurotrophin-4 (NT4). They regulate different aspects of the developing and adult nervous system by binding to specific members of the Trk family of receptor-tyrosine kinases (TrkA, -B, and -C) or to the p75 neurotrophin receptor (p75). Their involvement includes neuronal migration, cell death, axonal elongation, myelinization, neuronal differentiation, and synaptic plasticity (1-3). p75 is a multifunctional type I transmembrane protein that is structurally related to the tumor necrosis factor receptor superfamily. It binds all neurotrophins, alone or in complex with Trk receptors, but also other ligands such as amyloid peptides and pro-neurotrophins (4, 5). The association of p75 with different receptors shapes the outcome of a signaling event. For example, binding of p75 to TrkA in the presence of NGF promotes neuronal survival, whereas interaction with the Nogo receptor (NgR) in the presence of its ligands, such as Nogo and myelin-associated glycoprotein (MAG), results in growth cone collapse and the inhibition of axonal regeneration (1, 4, 5). In addition, different downstream p75-associated signaling cascades are triggered through the interaction of its cytosolic portion with multiple adaptor proteins (6). Neurotrophin binding to p75 also induces accumulation of p75 in recycling endosomes where it associates with specific p75 downstream signaling effectors (7-9). Hence trafficking of p75 in the cell body or in axons (10, 11) may determine downstream signaling of p75 as previously shown for Trk receptors (12). The regulation of p75 signaling becomes even more complicated with the finding that p75 is subject to a dual processing starting with shedding of the ectodomain and followed by ␥-secretase cleavage. Thi...