gamma-Secretase is a membrane-bound protease that cleaves within the transmembrane region of amyloid precursor protein to generate the C-termini of the Abeta peptides which are believed to play a central role in the neuropathology of Alzheimer's disease. An in vitro gamma-secretase assay using a recombinant substrate C100Flag has been developed to facilitate the characterization and identification of this enigmatic protease. Biochemical studies establish that gamma-secretase activity is catalyzed by a PS1-containing macromolecular complex. Moreover, the fact that the photoreactive active gamma-secretase inhibitor directed to the active site labels PS1 suggests that PS1 contains the active site of the protease. Presenilin/gamma-secretase as a potential target for AD therapy and its role in regulated intramembrane proteolysis are discussed.