Background: Several lines of investigation support the notion that endocytosis is crucial for Alzheimer's disease (AD) pathogenesis. Substantial evidence have already been reported regarding the mechanisms underlying amyloid precursor protein (APP) traffic, but the regulation of beta-site APP-Cleaving Enzyme 1 (BACE-1) distribution among endosomes, TGN and plasma membrane remains unclear. Dynamin, an important adaptor protein that controls sorting of many molecules, has recently been associated with AD but its functions remain controversial. Here we studied possible roles for dynamin 1 (dyn1) in Aβ biogenesis. Principal Findings: We found that genetic perturbation of dyn1 reduces both secreted and intracellular Aβ levels in cell culture. There is a dramatic reduction in BACE-1 cleavage products of APP (sAPPβ and βCTF). Moreover, dyn1 knockdown (KD) leads to BACE-1 redistribution from the Golgi-TGN/endosome to the cell surface. There is an increase in the amount of surface holoAPP upon dyn1 KD, with resultant elevation of α-secretase cleavage products sAPPα and αCTF. But no changes are seen in the amount of nicastrin (NCT) or PS1 N-terminal fragment (NTF) at cell surface with dyn1 KD. Furthermore, treatment with a selective dynamin inhibitor Dynasore leads to similar reduction in βCTF and Aβ levels, comparable to changes with BACE inhibitor treatment. But combined inhibition of BACE-1 and dyn1 does not lead to further reduction in Aβ, suggesting that the Aβ-lowering effects of dynamin inhibition are mainly mediated through regulation of BACE-1 internalization. Aβ levels in dyn1-/- primary neurons, as well as in 3-month old dyn1 haploinsufficient animals with AD transgenic background are consistently reduced when compared to their wildtype counterparts. Conclusions: In summary, these data suggest a previously unknown mechanism by which dyn1 affects amyloid generation through regulation of BACE-1 subcellular localization and therefore its enzymatic activities.