FE65 is an adaptor protein that binds to and forms a transcriptionally active complex with the ␥-secretase-derived amyloid precursor protein (APP) intracellular domain. The regulatory mechanisms of FE65-APP-mediated transcription are still not clear. In this report, we demonstrate that Dexras1, a Ras family small G protein, binds to FE65 PTB2 domain and potently suppresses the FE65-APP-mediated transcription. The suppression is not via competition for binding of FE65 between Dexras1 and APP because the two proteins can simultaneously bind to the FE65 PTB2 domain. Phosphorylation of FE65 tyrosine 547 within the PTB2 domain has been shown to enhance FE65-APPmediated transcription but not to influence binding to APP. Here we find that this phosphorylation event reduces the binding between Dexras1 and FE65. We also demonstrate that Dexras1 inhibits the FE65-APP-mediated transcription of glycogen synthase kinase 3 (GSK3). Moreover, small interfering RNA knockdown of Dexras1 enhances GSK3 expression and increases phosphorylation of Tau, a GSK3 substrate. Thus, Dexras1 functions as a suppressor of FE65-APP-mediated transcription, and FE65 tyrosine 547 phosphorylation enhances FE65-APP-mediated transcription, at least in part, by modulating the interaction between FE65 and Dexras1. These findings reveal a novel regulatory mechanism for FE65-APP-mediated signaling.FE65 is an adaptor protein with multiple protein-protein interaction domains including a WW domain and two C-terminal PTB domains (1). It is believed that FE65 functions as a "scaffold" protein to recruit various binding partners together to form a functional complex. In fact, FE65 has been shown to interact with a number of proteins. For example, transcription factors CP2 and Tip60 interact with the FE65 PTB1 (2, 3), c-Abl tyrosine kinase and Mena are FE65 WW domain binding partners (4, 5) and the nucleosome assembly factor SET binds FE65 (6). Of great interest, the Alzheimer disease amyloid precursor protein (APP) 2 has been shown to interact with the FE65 PTB2 domain (7-10).APP is a ubiquitously expressed type I integral transmembrane protein with a large ectodomain and a short intracellular domain (11,12). The functions of APP are not properly understood. However, APP is known to be processed first by either ␣-or -secretase and then by ␥-secretase. Cleavage of APP by -and ␥-secretases results in the generation of the 4-kDa -amyloid peptide (A). Aggregation of A to form neuritic plaques in brains is a pathological hallmark of Alzheimer disease (for reviews, see Refs. 1 and 13). FE65 has been shown to modulate the production of A (14 -16). In addition to A generation, cleavage of the APP by ␥-secretase releases the APP intracellular domain (AICD). Importantly, AICD has been shown to translocate to the nucleus as a complex with FE65 and the FE65⅐AICD complex strongly stimulates transcription of a GAL4-dependent reporter system (3,(17)(18)(19)(20). However, the control mechanism(s) of FE65-AICD nuclear transcription is currently unclear.Nuclear trans...