The evidence of strong pathological associations between type 2 diabetes and Alzheimer's disease (AD) has increased in recent years. Contrary to suggestions that anti-diabetes drugs may have potential for treating AD, we demonstrate here that the insulin sensitizing anti-diabetes drug metformin (Glucophage®) increased the generation of amyloid-β (Aβ), one of the major pathological hallmarks of AD, by promoting β- and γ-secretase-mediated cleavage of amyloid-β protein precursor (AβPP) in SH-SY5Y cells. In addition, we show that metformin caused autophagosome accumulation in Tg6799 AD model mice. Extremely high γ-secretase activity was also detected in autophagic vacuoles, apparently a novel site of Aβ peptide generation. Together, these data suggest that metformin-induced accumulation of autophagosomes resulted in increased γ-secretase activity and Aβ generation. Additional experiments indicated that metformin increased phosphorylation of AMP-activated protein kinase, which activates autophagy by suppressing mammalian target of rapamycin (mTOR). The suppression of mTOR then induces the abnormal accumulation of autophagosomes. We conclude that metformin, an anti-diabetes drug, may exacerbate AD pathogenesis by promoting amyloidogenic AβPP processing in autophagosomes.