BACE (beta-site APP cleaving enzyme) has been recently proposed as the major aspartyl protease displaying beta secretase activity in neurons. The C-terminal domain of BACE contains a dileucine motif (LL499/500) that can potentially regulate its trafficking and endocytosis, and an adjacent serine, which is a potential phosphorylation site (S498) that could modulate the activity of the LL motif. In this paper we show that S498 is phosphorylated by casein kinase 1 (CKI). Mutating the LL to dialanine (AA) caused an increase in the levels of mature BACE. The LL to AA mutation increased levels of BACE on the cell surface and decreased the internalization of BACE. Mutating the S498 to alanine did not alter levels of cell surface BACE. Mutating either the leucines or the serine did not alter the secretion of A(beta). Our data are consistent with a role for the cytoplasmic domain in regulating BACE trafficking and localization.