The amyloid beta peptide (Aβ) is derived from the amyloid precursor protein (APP) by secretase processing. APP is also cleaved by numerous other proteases, such as the type II transmembrane serine protease matriptase, with consequences on the production of Aβ. Because the APP homolog protein amyloid-like protein 1 (APLP1) shares similarities with APP, we sought to determine if matriptase also plays a role in its processing. Here, we demonstrate that matriptase directly interacts with APLP1 and that APLP1 is cleaved in cellulo by matriptase in its E1 ectodomains at arginine 124. Replacing Arg124 with Ala abolished APLP1 processing by matriptase. Using a bioluminescence resonance energy transfer (BRET) assay we found that matriptase reduces APLP1 homodimeric interactions. This study identifies matriptase as the first protease cleaving APLP1 in its dimerization domain, potentially altering the multiple functions associated with dimer formation.