Observations of elevated basal cortisol levels in Alzheimer's disease (AD) patients prompted the hypothesis that stress and glucocorticoids (GC) may contribute to the development and/or maintenance of AD. Consistent with that hypothesis, we show that stress and GC provoke misprocessing of amyloid precursor peptide in the rat hippocampus and prefrontal cortex, resulting in increased levels of the peptide C-terminal fragment 99 (C99), whose further proteolytic cleavage results in the generation of amyloid-beta (Abeta). We also show that exogenous Abeta can reproduce the effects of stress and GC on C99 production and that a history of stress strikingly potentiates the C99-inducing effects of Abeta and GC. Previous work has indicated a role for Abeta in disruption of synaptic function and cognitive behaviors, and AD patients reportedly show signs of heightened anxiety. Here, behavioral analysis revealed that like stress and GC, Abeta administration causes spatial memory deficits that are exacerbated by stress and GC; additionally, Abeta, stress and GC induced a state of hyperanxiety. Given that the intrinsic properties of C99 and Abeta include neuroendangerment and behavioral impairment, our findings suggest a causal role for stress and GC in the etiopathogenesis of AD, and demonstrate that stressful life events and GC therapy can have a cumulative impact on the course of AD development and progression.