Several β-secretase inhibitors were designed based on hydroxyethylamine dipeptide isostere (HDI) structures and were synthesized by a methodology using the aza-Payne rearragement and O,N-acyl transfer reactions to study their structure–activity relationships. Among these pseudopeptides, effective compounds were developed as the first β-secretase inhibitors containing the HDI transition state mimic with potent enzyme inhibitory activity (IC50 < 100 nM).