The balance of intracellular cholesterol has proven to be critical to the production of beta-amyloid (A beta). Reducing cholesterol in vitro leads to decreased production of A beta, whereas an increase in cellular cholesterol induces A beta production. Liver X Receptor (LXR) agonists are known to increase cholesterol efflux from cells, but there are conflicting reports as to the effects of these agonists on A beta production. We therefore examined the effects of efflux-inducing agents on A beta production in vitro. We used methyl-beta-cyclodextrin and an LXR agonist (TO-901317) to induce cholesterol efflux and studied the resulting A beta production in a stable amyloid precursor protein (APP) -transfected cell line. When cholesterol efflux was induced with methyl-beta-cyclodextrin there was a >60% decrease in A beta(40) and A beta(42) production. However, while activation of LXR using TO-901317-induced cholesterol efflux in the presence of a cholesterol acceptor, no changes in A beta levels were recorded. When cells were incubated with TO-901317 above the concentration required for maximal cholesterol efflux, there was a 150% increase in A beta(42) levels. The absence of a cholesterol acceptor from the culture media (preventing cholesterol efflux) did not blunt this increase in A beta(42), suggesting that the effects of TO-901317 on A beta(42) are efflux independent. These results were confirmed in APP stably transfected human H4 cells, which revealed in addition to a 200% increase in A beta(42) levels, a concomitant 80% reduction in A beta(38). A cell-free gamma-secretase assay confirmed that TO-901317 can directly alter gamma-secretase activity. These data demonstrate that TO-901317 can directly modulate the site of cleavage of APP by gamma-secretase in vitro.