APP-BP1, first identified as a protein that interacts with the carboxyl (C) terminus of the amyloid precursor protein (APP), is one-half of the bipartite activating enzyme for the ubiquitin-like protein NEDD8. We report here that APP-BP1 also specifically interacts with apoptosis stimulating protein of p53 ASPP2 in non-transfected cells through the functional predominant N-terminal domain ASPP2(332-483). ASPP2 inhibits the ability of APP-BP1 to rescue the ts41 cell cycle mutation and inhibits APP-BP1 induced apoptosis in primary neurons. ASPP2 reduces the ability of NEDD8 to conjugate to Cullin-1, inhibits APP-BP1-dependent ts41 cell proliferation, and blocks the ability of APP-BP1 to cause apoptosis and to cause DNA synthesis in neurons. We also show that ASPP2 activates nuclear factor-kappaB (NF-kappaB) transcriptional activity, which seems to be inhibited by the neddylation pathway since the dominant negative NEDD8 activating enzyme causes enhanced NF-kappaB activity. Our data provide the first in vivo evidence that ASPP2 is a negative regulator of the neddylation pathway through specific interaction with APP-BP1 and suggest that dysfunction of the APP-BP1 interaction with APP may be one cause of Alzheimer's disease.