Proteolysis of Amyloid Precursor Protein, APP, results in the formation of amyloid β (Aβ) peptides, which have been associated with Alzheimer's disease (AD). Recently the failure of therapeutic agents that prohibit Aβ aggregation and sequester Cu/Zn in providing symptomatic relief to AD patients has questioned the amyloid and metal ion hypothesis. Alternatively, abnormal heme homeostasis and reduced levels of neurotransmitters in the brain are hallmark features of AD. Heme can bind Aβ peptides forming a peroxidase type active site which can oxidatively degrade neurotransmitters like serotonin. To date the reactive species responsible for this activity has not been identified. Using rapid kinetics and freeze quenching, we show that heme bound Aβ forms a highly reactive intermediate, compound I. Thus, compound I provides a basis for elucidating the oxidative degradation of neurotransmitters like serotonin, resulting in abnormal neurotransmission, a key pathological feature of AD. Site directed mutants indicate that the Arg5 and Tyr10 residues, unique to human Aβ, affect the rates of formation and decay of compound I providing insight into their roles in the oxidative degradation of neurotransmitters. Tyr10 can potentially play a natural protective role against the highly reactive oxidant, compound I, in AD.