• Sometime during the study, patients originally given placebo will be given LY450139. This may help show the effect of long term treatment. [ Time Frame: Throughout the study ] [ Designated as safety issue: No ]
• A chemical marker of AD in the blood which may be lowered by LY450139. [ Time Frame: Throughout the study ] [ Designated as safety issue: No ]
• Energy usage (metabolism) seen on a brain scan called FDG-PET. [ Time Frame: Baseline and endpoint ] [ Designated as safety issue: No ]
• Brain size (volume) seen with AD on a brain scan called vMRI. [ Time Frame: Baseline and endpoint ] [ Designated as safety issue: No ]
• Amount of brain amyloid plaque seen in AD on a brain scan called AV-45-PET. [ Time Frame: Baseline and endpoint ] [ Designated as safety issue: No ]
• A chemical marker (tau) known to be elevated in spinal fluid in AD. [ Time Frame: Baseline and endpoint ] [ Designated as safety issue: No ]
• Safety [ Time Frame: Throughout the study ] [ Designated as safety issue: Yes ]
• To measure levels of LY450139 and their effect on safety, chemical markers, and effectiveness. [ Time Frame: During the study ] [ Designated as safety issue: Yes ]
• Quality of life. [ Time Frame: Throughout the study ] [ Designated as safety issue: No ]

• Sometime during the study, patients originally given placebo will be given LY450139. This may help show the effect of long term treatment. [ Time Frame: Throughout the study ] [ Designated as safety issue: No ]
• A chemical marker of AD in the blood which may be lowered by LY450139. [ Time Frame: Throughout the study ] [ Designated as safety issue: No ]
• Energy usage (metabolism) seen on a brain scan called FDG-PET. [ Time Frame: Baseline and endpoint ] [ Designated as safety issue: No ]
• Brain size (volume) seen with AD on a brain scan called vMRI. [ Time Frame: Baseline and endpoint ] [ Designated as safety issue: No ]
• Amount of brain amyloid plaque seen in AD on a brain scan called PIB-PET. [ Time Frame: Baseline and endpoint ] [ Designated as safety issue: No ]
• A chemical marker (tau) known to be elevated in spinal fluid in AD. [ Time Frame: Baseline and endpoint ] [ Designated as safety issue: No ]
• Safety [ Time Frame: Throughout the study ] [ Designated as safety issue: Yes ]
• To measure levels of LY450139 and their effect on safety, chemical markers, and effectiveness. [ Time Frame: During the study ] [ Designated as safety issue: Yes ]
• Quality of life. [ Time Frame: Throughout the study ] [ Designated as safety issue: No ]

Alzheimer's disease (AD) is a fatal degenerative disease of the brain for which there is no cure. AD causes brain cells to die. AD is thought to be caused by an excess of A-Beta amyloid, a sticky protein in the brain that forms amyloid plaques. At autopsy, AD patients are required to have these amyloid plaques in the brain in order to have a definitive diagnosis of AD. Inhibiting the enzyme gamma-secretase inhibits the production of A-Beta amyloid as measured in blood and spinal fluid in humans tested thus far and in blood, spinal fluid and brain in animals tested thus far. This study will use several different tests to measure the effect of LY450139 on both A-Beta amyloid and amyloid plaques for some patients. The build up of amyloid plaques will be measured by a new brain scan that can take a picture of amyloid plaques in the brain. Other tests will attempt to measure the overall function of the brain and brain size in some patients. In this trial, patients who initially receive placebo (inactive sugar pill) will at a certain point in the study be switched over to active drug, LY450139. In other words, all patients will eventually receive active drug. Each patient's participation will last approximately two years. Patients taking approved AD medications may participate in this study and continue taking these medications during the study. All patients who complete this study will have the option to continue receiving LY450139 by participating in an open label study.

• Drug: LY450139
• Drug: placebo

Inclusion Criteria:

• Meets criteria for mild to moderate AD with Mini-Mental State Examination score of 16 through 26 at visit 1
• Modified Hachinski Ischemia Scale score of less than or equal to 4
• Geriatric Depression Scale score of less than or equal to 6
• A magnetic resonance imaging (MRI) or computerized tomography (CT)scan in the last 2 years with no findings inconsistent with a diagnosis of Alzheimer's disease
• If female must be without menstruation for at least 12 consecutive months or have had both ovaries removed.

Exclusion Criteria:

• Is not capable of swallowing whole oral medication
• Has serious or unstable illnesses
• Does not have a reliable caregiver
• Chronic alcohol or drug abuse within the past 5 years
• Has ever had active vaccination for AD