The aspartyl protease BACE1 cleaves the amyloid precursor protein and the sialyltransferase ST6Gal I and is important in the pathogenesis of Alzheimer's disease. The normal function of BACE1 and additional physiological substrates have not been identified. Here we show that BACE1 acts on the P-selectin glycoprotein ligand 1 (PSGL-1), which mediates leukocyte adhesion in inflammatory reactions. In human monocytic U937 and human embryonic kidney 293 cells expressing endogenous or transfected BACE1, PSGL-1 was cleaved by BACE1 to generate a soluble ectodomain and a C-terminal transmembrane fragment. No evidence of the cleavage fragment was seen in primary cells derived from mice deficient in BACE1. By using deletion constructs and enzymatic deglycosylation of the C-terminal PSGL-1 fragments, the cleavage site in PSGL-1 was mapped to the juxtamembrane region within the ectodomain. In an in vitro assay BACE1 catalyzed the formation of the PSGL-1 products seen in vivo. The cleavage occurred at a Leu-Ser peptide bond as identified by mass spectrometry using a synthetic peptide. We conclude that PSGL-1 is an additional substrate for BACE1.