Presenilin 1 (PS1), presenilin 2, and nicastrin form high molecular weight complexes that are necessary for the endoproteolysis of several type 1 transmembrane proteins, including amyloid precursor protein (APP) and the Notch receptor, by apparently similar mechanisms. The cleavage of the Notch receptor at the "S3-site" releases a C-terminal cytoplasmic fragment (Notch intracellular domain) that acts as the intracellular transduction molecule for Notch activation. Missense mutations in the presenilins cause familial Alzheimer's disease by augmenting the "gamma-secretase" cleavage of APP and overproducing one of the proteolytic derivatives, the Abeta peptide. Null mutations in PS1 inhibit both gamma-secretase cleavage of APP and S3-site cleavage of the Notch receptor. Mice lacking PS1 function have defective Notch signaling and die perinatally with severe skeletal and brain deformities. We report here that a genetic modifier on mouse distal chromosome 1, coinciding with the locus containing Nicastrin, influences presenilin-mediated Notch S3-site cleavage and the resultant Notch phenotype without affecting presenilin-mediated APP gamma-site cleavage. Two missense substitutions of residues conserved among vertebrates have been identified in nicastrin. These results indicate that Notch S3-site cleavage and APP gamma-site cleavage are distinct presenilin-dependent processes and support a functional interaction between nicastrin and presenilins in vertebrates. The dissociation of Notch S3-site and APP gamma-site cleavage activities will facilitate development of gamma-secretase inhibitors for treatment of Alzheimer's disease.