Abstract: The present invention provides the crystal structure of BACE-1 complexed with both an active site inhibitor and an exosite peptide containing the core sequence YPYFI. The crystal structure shows the exosite peptide bound to the BACE-1 exosite and identifies a novel peptide binding site on the surface of the BACE-1. The invention also provides the residues that make up the exosite binding site within 6.0 ? of any exosite peptide atom which are: E316, K317, F318, P319, F322, G325, E326, Q327, L328, V329, C330, W331, Q332, A333, T335, D372, V373, A374, S376, D378, D379, C380, Y381.