Rapid progress in deciphering the biological mechanism of Alzheimer's disease (AD) has arisen from the application of molecular and cell biology to this complex disorder of the limbic and association cortices. In turn, new insights into fundamental aspects of protein biology have resulted from research on the disease. This beneficial interplay between basic and applied cell biology is well illustrated by advances in understanding the genotype-to-phenotype relationships of familial Alzheimer's disease. All four genes definitively linked to inherited forms of the disease to date have been shown to increase the production and/or deposition of amyloid beta-protein in the brain. In particular, evidence that the presenilin proteins, mutations in which cause the most aggressive form of inherited AD, lead to altered intramembranous cleavage of the beta-amyloid precursor protein by the protease called gamma-secretase has spurred progress toward novel therapeutics. The finding that presenilin itself may be the long-sought gamma-secretase, coupled with the recent identification of beta-secretase, has provided discrete biochemical targets for drug screening and development. Alternate and novel strategies for inhibiting the early mechanism of the disease are also emerging. The progress reviewed here, coupled with better ability to diagnose the disease early, bode well for the successful development of therapeutic and preventative drugs for this major public health problem.