In vitro reconstitution of functions of membrane proteins is often hampered by aggregation, misfolding, or lack of post-translational modifications of the proteins attributable to overexpression. To overcome this technical obstacle, we have developed a method to express multimeric integral membrane proteins in extracellular (budded) baculovirus particles that are released from Sf9 cells co-infected with multiple transmembrane proteins. We applied this method to the reconstitution of gamma-secretase, a membrane protease complex that catalyzes the intramembrane cleavage of beta-amyloid precursor protein to release Abeta peptides, the major component of amyloid deposits in Alzheimer brains as well as of Notch. When we co-infected Sf9 cells with human presenilin 1 (PS1), nicastrin, APH-1a, and PEN-2, a high-molecular-weight membrane protein complex that contained PS1 exclusively in its fragment form associated with three other cofactor proteins was reconstituted and recovered in a highly gamma-secretase-active state in budded virus particles, whereas nonfunctional PS1 holoproteins massively contaminated the parental Sf9 cell membranes. The relative gamma-secretase activity (per molar PS1 fragments) was concentrated by approximately 2.5 fold in budded virus particles compared with that in Sf9 membranes. The budded baculovirus system will facilitate structural and functional analyses of gamma-secretase, as well as screening of its binding molecules or inhibitors, and will also provide a versatile methodology for the characterization of a variety of membrane protein complexes.