gamma-Secretase cleaves multiple substrates within the transmembrane domain that include the amyloid precursor protein as well as the Notch family of receptors. These substrates are associated with Alzheimer disease and cancer. Despite extensive investigation of this protease, little is known regarding the regulation of gamma-secretase specificity. To discover selective inhibitors for drug development and for probing the mechanisms of gamma-secretase specificity, we screened chemical libraries and consequently developed a di-coumarin family of inhibitors that preferentially inhibit gamma-secretase-mediated production of Abeta42 over other cleavage activities. These coumarin dimer-based compounds interact with gamma-secretase by binding to an allosteric site. By developing a multiple photo-affinity probe approach, we demonstrate that this allosteric binding causes a conformational change within the active site of gamma-secretase at the S2 and S1 sub-sites that leads to selective inhibition of Abeta42. In conclusion, by using these di-coumarin compounds, we reveal a mechanism by which gamma-secretase specificity is regulated and provide insights into the molecular basis by which familial presenilin mutations may affect the active site and specificity of gamma-secretase. Furthermore, this class of selective inhibitors provides the basis for development of Alzheimer disease therapeutic agents.