BACE1 is an aspartyl protease responsible for cleaving amyloid precursor protein to liberate Abeta, which aggregates leading to plaque deposits implicated in Alzheimer's disease. We have identified small-molecule acylguanidine inhibitors of BACE1. Crystallographic studies show that these compounds form unique hydrogen-bonding interactions with the catalytic site aspartic acids and stabilize the protein in a flap-open conformation. Structure-based optimization led to the identification of potent analogs, such as 10d (BACE1 IC(50) = 110 nM).