Intracellular beta amyloid (Aβ) accumulation is a key feature of early Alzheimer's disease (AD) and precedes the appearance of Aβ in extracellular plaques. Aβ is generated through proteolytic processing of amyloid precursor protein (APP), but the intracellular site of Aβ production is unclear. APP has been localized to multivesicular endosomes/bodies (MVBs) where sorting of APP onto ILVs could promote amyloidogenic processing or reduce Aβ production/accumulation by sorting APP and processing products to lysosomes for degradation. We show that APP localizes to the ILVs of a subset of MVBs that also traffic EGF receptor (EGFR), and is delivered to lysosomes for degradation. Depletion of the ESCRT components, Hrs or Tsg101, inhibited targeting of APP to ILVs and the subsequent delivery to lysosomes and lead to increased intracellular Aβ accumulation. This was accompanied by dramatically decreased Aβ secretion. Thus, the early ESCRT machinery has a dual role in limiting intracellular Aβ accumulation through targeting of APP and processing products to the lysosome for degradation and promoting Aβ secretion.