Lithium is one of the most widely used mood-stabilizing agents for the treatment of bipolar disorder. Although the underlying mechanism(s) of this mood stabilizer remains controversial, recent evidence linking lithium to neurotrophic/neuroprotective effects (Choi and Sung (2000) 1475, 225-230; Davies et al. (2000) 351, 95-105) suggests novel benefits of this drug in addition to mood stabilization. Here, we report that both lithium as well as valproic acid (VPA) inhibit β-amyloid peptide (Aβ) production in HEK293 cells stably transfected with Swedish amyloid precursor protein (APP)751 and in the brains of the PDAPP (APPV717F) Alzheimer's disease transgenic mouse model at clinically relevant plasma concentrations. Both lithium and VPA are known to be glycogen synthase kinase-3 (GSK3) inhibitors. Our studies reveal that GSK3β is a potential downstream kinase, which modulates APP processing because inhibition of GSK3 activity by either a dominant negative GSK3β kinase-deficient construct or GSK3β antisense oligonucleotide mimics lithium and VPA effects. Moreover, lithium treatment abolished GSK3β-mediated Aβ increase in the brains of GSK3β transgenics and reduced plaque burden in the brains of the PDAPP (APPV717F) transgenic mice.