The proteolytic processing of amyloid beta precursor protein (APP) has long been studied because of its association with the pathology of Alzheimer's disease (AD). The ectodomain of APP is shed by alpha- or beta-secretase cleavage. The remaining membrane bound stub can then undergo regulated intramembrane proteolysis (RIP) by gamma-secretase. This cleavage can release amyloid beta (Abeta) from the stub left by beta-secretase cleavage but also releases the APP intracellular domain (AICD) after alpha- or beta-secretase cleavage. The physiological functions of this proteolytic processing are not well understood. We compare the proteolytic processing of APP to the ligand-dependent RIP of Notch. In this review, we discuss recent evidence suggesting that TAG1 is a functional ligand for APP. The interaction between TAG1 and APP triggers gamma-secretase-dependent release of AICD. TAG1, APP and Fe65 colocalise in the neurogenic ventricular zone and in fetal neural progenitor cells in vitro. Experiments in TAG1, APP and Fe65 null mice as well as TAG1 and APP double-null mice demonstrate that TAG1 induces a gamma-secretase- and Fe65-dependent suppression of neurogenesis.