An endoproteolytic cleavage termed ␣-cleavage between residues 111/112 is a characteristic feature of the cellular prion protein (PrP C ). This cleavage generates a soluble N-terminal fragment (PrPN1) and a glycosylphosphatidylinositol-anchored C-terminal fragment (PrPC1). Independent studies demonstrate that modulating PrP C ␣-cleavage represents a potential therapeutic strategy in prion diseases. The regulation of PrP C ␣-cleavage is unclear. The only known domain that is essential for the ␣-cleavage to occur is a hydrophobic domain (HD). Importantly, the HD is also essential for the formation of PrP C homodimers. To explore the role of PrP C homodimerization on the ␣-cleavage, we used a well described inducible dimerization strategy whereby a chimeric PrP C composed of a modified FK506-binding protein (Fv) fused with PrP C and termed Fv-PrP is incubated in the presence of a dimerizer AP20187 ligand. We show that homodimerization leads to a considerable increase of PrP C ␣-cleavage in cultured cells and release of PrPN1 and PrPC1. Interestingly, enforced homodimerization increased PrP C levels at the plasma membrane, and preventing PrP C trafficking to the cell surface inhibited dimerization-induced ␣-cleavage. These observations were confirmed in primary hippocampal neurons from transgenic mice expressing Fv-PrP. The proteases responsible for the ␣-cleavage are still elusive, and in contrast to initial studies we confirm more recent investigations that neither ADAM10 nor ADAM17 are involved. Importantly, PrPN1 produced after PrP C homodimerization protects against toxic amyloid- (A) oligomers. Thus, our results show that PrP C homodimerization is an important regulator of PrP C ␣-cleavage and may represent a potential therapeutic avenue against A toxicity in Alzheimer's disease.