Alzheimer’s disease is a neurodegenerative disease characterized by aberrant proteolysis of the transmembrane protein APP. The brain enriched adaptor protein Fe65 interacts with APP and participates together with APP and/or APP fragments in a number of cytoplasmic and nuclear functions. However, how the Fe65 subcellular localization, interaction with APP/APP fragments are regulated, as well as how Fe65 influences APP processing, is still not fully understood. In this study, we investigated the effect of Fe65 Ser-228 phosphorylation on Fe65 nuclear localization, APP interaction and APP processing. We show that although a Ser-228 phosphomimetic variant of Fe65 (Fe65-S2285E) was not excluded from the nucleus, a clear reduction of the nuclear level and the nuclear/cytoplasmic ratio of Fe65-S228E could be observed, suggesting that phosphorylation of Ser-288 could participate in regulation of the Fe65 subcellular localization. Interestingly, we found that not only Fe65-S2285E, but also mutation of Ser-228 to alanine (Fe65-S228A) resulted in a similar and dramatic increase of the Fe65 interaction with full-length APP. Moreover, we found that this increased APP interaction resulted in reduced α-secretase processing of APP and thus less generation of the neuroprotective sAPPα fragment. This suggest that the N-terminal domain of Fe65 may have a more prominent role in mediating the Fe65-APP interaction and regulating APP processing than previously thought.