Amyloid beta-peptide (Abeta) is generated by the consecutive cuts of two membrane-bound proteases. Beta-secretase cuts at the N terminus of the Abeta domain, whereas gamma-secretase mediates the C-terminal cut. Recent evidence suggests that the presenilin (PS) proteins, PS1 and PS2, may be gamma-secretases. Because PSs principally exist as high molecular weight protein complexes, biologically active gamma-secretases likely require other cofactors such as nicastrin (Nct) for their activities. Here we show that preferentially mature Nct forms a stable complex with PSs. Furthermore, we have down-regulated Nct levels by using a highly specific and efficient RNA interference approach. Very similar to a loss of PS function, down-regulation of Nct levels leads to a massive accumulation of the C-terminal fragments of the beta-amyloid precursor protein. In addition, Abeta production was markedly reduced. Strikingly, down-regulation of Nct destabilized PS and strongly lowered levels of the high molecular weight PS1 complex. Interestingly, absence of the PS1 complex in PS1(-/-) cells was associated with a strong down-regulation of the levels of mature Nct, suggesting that binding to PS is required for trafficking of Nct through the secretory pathway. Based on these findings we conclude that Nct and PS regulate each other and determine gamma-secretase function via complex formation.