Gamma-secretase mediates the final proteolytic cleavage, which liberates amyloid beta-peptide (Abeta), the major component of senile plaques in the brains of Alzheimer disease patients. Therefore, gamma-secretase is a prime target for Abeta-lowering therapeutic strategies. gamma-Secretase is a protein complex composed of four different subunits, presenilin (PS), APH-1, nicastrin, and PEN-2, which are most likely present in a 1:1:1:1 stoichiometry. PS harbors the catalytically active site, which is critically required for the aspartyl protease activity of gamma-secretase. Moreover, numerous familial Alzheimer disease-associated mutations within the PSs increase the production of the aggregation-prone and neurotoxic 42-amino acid Abeta. Nicastrin may serve as a substrate receptor, although this has recently been challenged. PEN-2 is required to stabilize PS within the gamma-secretase complex. No particular function has so far been assigned to APH-1. The four components are sufficient and required for gamma-secretase activity. At least six different gamma-secretase complexes exist that are composed of different variants of PS and APH-1. All gamma-secretase complexes can exert pathological Abeta production. Assembly of the gamma-secretase complex occurs within the endoplasmic reticulum, and only fully assembled and functional gamma-secretase complexes are transported to the plasma membrane. Structural analysis by electron microscopy and chemical cross-linking reveals a water-containing cavity, which allows intramembrane proteolysis. Specific and highly sensitive gamma-secretase inhibitors have been developed; however, they interfere with the physiological function of gamma-secretase in Notch signaling and thus cause rather significant side effects in human trials. Modulators of gamma-secretase, which selectively affect the production of the pathological 42-amino acid Abeta, do not inhibit Notch signaling.