We have previously shown that the aminooxazoline xanthene scaffold can generate potent and orally efficacious BACE1 inhibitors although certain of these compounds exhibited potential hERG liabilities. In this article, we describe 4-aza substitution on the xanthene core as a means to increase BACE1 potency while reducing hERG binding affinity. Further optimization of the P3 and P2' side chains resulted in the identification of 42 (AMG-8718), a compound with a balanced profile of BACE1 potency, hERG binding affinity, and Pgp recognition. This compound produced robust and sustained reductions of CSF and brain Aβ levels in a rat pharmacodynamic model and exhibited significantly reduced potential for QTc elongation in a cardiovascular safety model.