The two major isoforms of human APP, APP695 and APP751, differ by the presence of a Kunitz-type protease inhibitor (KPI) domain in the extracellular region. APP processing and function is thought to be regulated by homodimerization. We used bimolecular fluorescence complementation (BiFC) to study dimerization of different APP isoforms and mutants. APP751 was found to form significantly more homodimers than APP695. Mutation of dimerization motifs in the TM domain did not affect fluorescence complementation, but native folding of KPI is critical for APP751 homodimerization. APP751 and APP695 dimers were mostly localized at steady state in the Golgi region, suggesting that most of the APP751 and 695 dimers are in the secretory pathway. Mutation of the KPI led to the retention of the APP homodimers in the endoplasmic reticulum. We finally showed that APP751 is more efficiently processed through the nonamyloidogenic pathway than APP695. These findings provide new insight on the particular role of KPI domain in APP dimerization. The correlation observed between dimerization, subcellular localization, and processing suggests that dimerization acts as an efficient regulator of APP trafficking in the secretory compartments that has major consequences on its processing.