The neural type I membrane protein Alcadein α (Alcα), is primarily cleaved by amyloid β-protein precursor (APP) α-secretase to generate a membrane-associated carboxyl-terminal fragment (Alcα CTF), which is further cleaved by γ-secretase to secrete p3-Alcα peptides and generate an intracellular cytoplasmic domain fragment (Alcα ICD) in the late secretory pathway. By association with the neural adaptor protein X11L (X11-like), Alcα and APP form a ternary complex that suppresses the cleavage of both Alcα and APP by regulating the transport of these membrane proteins into the late secretory pathway where secretases are active. However, it has not been revealed how Alcα and APP are directed from the ternary complex formed largely in the Golgi into the late secretory pathway to reach a nerve terminus. Using a novel transgenic mouse line expressing excess amounts of human Alcα CTF (hAlcα CTF) in neurons, we found that expression of hAlcα CTF induced excess production of hAlcα ICD, which facilitated APP transport into the nerve terminus and enhanced APP metabolism, including Aβ generation. In vitro cell studies also demonstrated that excess expression of Alcα ICD released both APP and Alcα from the ternary complex. These results indicate that regulated intramembrane proteolysis of Alcα by γ-secretase regulates APP trafficking and the production of Aβ in vivo.