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BACKGROUND: The familial and sporadic forms of Alzheimer's disease (AD) have an identical pathology with a severe disparity in the time of onset [1]. The pathological similarity suggests that epigenetic processes may phenocopy the Familial Alzheimer's disease (FAD) mutations within sporadic AD. Numerous groups have demonstrated that FAD mutations in presenilin result in 'loss of function' of gamma-secretase mediated APP cleavage [2], [3], [4], [5]. Accordingly, ER stress is prominent within the pathologically impacted brain regions in AD patients [6] and is reported to inhibit APP trafficking through the secretory pathway [7], [8]. As the maturation of APP and the cleaving secretases requires trafficking through the secretory pathway [9], [10], [11], we hypothesized that ER stress may block trafficking requisite for normal levels of APP cleavage and that the small molecular chaperone 4-phenylbutyrate (PBA) may rescue the proteolytic deficit. METHODOLOGY/PRINCIPAL FINDINGS: The APP-Gal4VP16/Gal4-reporter screen was stably incorporated into neuroblastoma cells in order to assay gamma-secretase mediated APP proteolysis under normal and pharmacologically induced ER stress conditions. Three unrelated pharmacological agents (tunicamycin, thapsigargin and brefeldin A) all repressed APP proteolysis in parallel with activation of unfolded protein response (UPR) signaling-a biochemical marker of ER stress. Co-treatment of the gamma-secretase reporter cells with PBA blocked the repressive effects of tunicamycin and thapsigargin upon APP proteolysis, UPR activation, and apoptosis. In unstressed cells, PBA stimulated gamma-secretase mediated cleavage of APP by 8-10 fold, in the absence of any significant effects upon amyloid production, by promoting APP trafficking through the secretory pathway and the stimulation of the non-pathogenic alpha/gamma-cleavage. CONCLUSIONS/SIGNIFICANCE: ER stress represses gamma-secretase mediated APP proteolysis, which replicates some of the proteolytic deficits associated with the FAD mutations. The small molecular chaperone PBA can reverse ER stress induced effects upon APP proteolysis, trafficking and cellular viability. Pharmaceutical agents, such as PBA, that stimulate alpha/gamma-cleavage of APP by modifying intracellular trafficking should be explored as AD therapeutics.