Clues to Alzheimer disease (AD) pathogenesis come from a variety of different sources including studies of clinical and neuropathological features, biomarkers, genomics and animal and cellular models. An important role for amyloid precursor protein (APP) and its processing has emerged and considerable interest has been directed at the hypothesis that Aβ peptides induce changes central to pathogenesis. Accordingly, molecules that reduce the levels of Aβ peptides have been discovered such as γ-secretase inhibitors (GSIs) and modulators (GSMs). GSIs and GSMs reduce Aβ levels through very different mechanisms. However, GSIs, but not GSMs, markedly increase the levels of APP CTFs that are increasingly viewed as disrupting neuronal function. Here, we evaluated the effects of GSIs and GSMs on a number of neuronal phenotypes possibly relevant to their use in treatment of AD. We report that GSI disrupted retrograde axonal trafficking of brain-derived neurotrophic factor (BDNF), suppressed BDNF-induced downstream signaling pathways and induced changes in the distribution within neuronal processes of mitochondria and synaptic vesicles. In contrast, treatment with a novel class of GSMs had no significant effect on these measures. Since knockdown of APP by specific siRNA prevented GSI-induced changes in BDNF axonal trafficking and signaling, we concluded that GSI effects on APP processing were responsible, at least in part, for BDNF trafficking and signaling deficits. Our findings argue that with respect to anti-amyloid treatments, even an APP-specific GSI may have deleterious effects and GSMs may serve as a better alternative.