Memapsin 2 (BACE1, β-secretase), a membrane aspartic protease, functions in the cleavage of brain β-amyloid precursor protein (APP) leading to the production of β-amyloid. Because the excess level of β-amyloid in the brain is a leading factor in Alzheimer's disease (AD), memapsin 2 is a major therapeutic target for inhibitor drugs. The substrate-binding cleft of memapsin 2 accommodates 12 subsite residues, from P8 to P4′. We have determined the hydrolytic preference as relative kcat/KM (preference constant) in all 12 subsites and used these data to establish a predictive algorithm for substrate hydrolytic efficiency. Using the sequences from 12 reported memapsin 2 protein substrates, the predicted and experimentally determined preference constants have an excellent correlation coefficient of 0.97. The predictive model indicates that the hydrolytic preference of memapsin 2 is determined mainly by the interaction with six subsites (from P4 to P2′), a conclusion supported by the crystal structure B-factors calculated for the various residues of transition-state analogs bound to different memapsin 2 subsites. The algorithm also predicted that the replacement of the P3, P2, and P1 subsites of APP from Val, Lys, and Met, respectively, to Ile, Asp, and Phe, respectively, (APPIDF) would result in a highest hydrolytic rate for β-amyloid-generating APP variants. Because more β-amyloid was produced from cells expressing APPIDF than those expressing APP with Swedish mutations, this designed APP variant may be useful in new memapsin 2 substrates or transgenic mice for AD studies.