Processing of amyloid precursor protein (APP) by gamma-secretase is the last step in the formation of the Abeta peptides associated Alzheimer's disease. Solid-state NMR spectroscopy is used to establish the structural features of the transmembrane (TM) and juxtamembrane (JM) domains of APP that facilitate proteolysis. Using peptides corresponding to the APP TM and JM regions (residues 618-660), we show that the TM domain forms an alpha-helical homodimer mediated by consecutive GxxxG motifs. We find that the APP TM helix is disrupted at the intracellular membrane boundary near the epsilon-cleavage site. This helix-to-coil transition is required for gamma-secretase processing; mutations that extend the TM alpha-helix inhibit epsilon cleavage, leading to a low production of Abeta peptides and an accumulation of the alpha- and beta-C-terminal fragments. Our data support a progressive cleavage mechanism for APP proteolysis that depends on the helix-to-coil transition at the TM-JM boundary and unraveling of the TM alpha-helix.