Presenilins (PSENs) form the catalytic component of the γ-secretase complex, responsible for intramembrane proteolysis of amyloid precursor protein (APP) and Notch, among many other membrane proteins. Previously, we identified a PSEN1-binding domain in APP, encompassing half of the transmembrane domain following the amyloid β (Aβ) sequence. Based on this, we designed peptides mimicking this interaction domain with the aim to selectively block APP processing and Aβ generation through interfering with enzyme-substrate binding. We identified a peptide sequence that, when fused to a virally derived translocation peptide, significantly lowered Aβ production (IC(50): 317 nM) in cell-free and cell-based assays using APP-carboxy terminal fragment as a direct γ-secretase substrate. Being derived from the APP sequence, this inhibitory peptide did not affect NotchΔE γ-cleavage, illustrating specificity and potential therapeutic value. In cell-based assays, the peptide strongly suppressed APP shedding, demonstrating that it exerts the inhibitory effect already upstream of γ-secretase, most likely through steric hindrance.