FK506 binding proteins (FKBPs), also called immunophilins, are prolyl-isomerases (PPIases) that participate in a wide variety of cellular functions including hormone signaling and protein folding. Recent studies indicate that proteins that contain PPIase activity can also alter the processing of Alzheimer's Amyloid Precursor Protein (APP). Originally identified in hematopoietic cells, FKBP52 is much more abundantly expressed in neurons, including the hippocampus, frontal cortex, and basal ganglia. Given the fact that the high molecular weight immunophilin FKBP52 is highly expressed in CNS regions susceptible to Alzheimer's, we investigated its role in Abeta toxicity. Towards this goal, we generated Abeta transgenic Drosophila that harbor gain of function or loss of function mutations of FKBP52. FKBP52 overexpression reduced the toxicity of Abeta and increased lifespan in Abeta flies, whereas loss of function of FKBP52 exacerbated these Abeta phenotypes. Interestingly, the Abeta pathology was enhanced by mutations in the copper transporters Atox1, which interacts with FKBP52, and Ctr1A and was suppressed in FKBP52 mutant flies raised on a copper chelator diet. Using mammalian cultures, we show that FKBP52 (-/-) cells have increased intracellular copper and higher levels of Abeta. This effect is reversed by reconstitution of FKBP52. Finally, we also found that FKBP52 formed stable complexes with APP through its FK506 interacting domain. Taken together, these studies identify a novel role for FKBP52 in modulating toxicity of Abeta peptides.