Signalling through the receptor protein Notch, which is involved in crucial cell-fate decisions during development, requires ligand-induced cleavage of Notch. This cleavage occurs within the predicted transmembrane domain, releasing the Notch intracellular domain (NICD), and is reminiscent of gamma-secretase-mediated cleavage of beta-amyloid precursor protein (APP), a critical event in the pathogenesis of Alzheimer's disease. A deficiency in presenilin-1 (PS1) inhibits processing of APP by gamma-secretase in mammalian cells, and genetic interactions between Notch and PS1 homologues in Caenorhabditis elegans indicate that the presenilins may modulate the Notch signalling pathway. Here we report that, in mammalian cells, PS1 deficiency also reduces the proteolytic release of NICD from a truncated Notch construct, thus identifying the specific biochemical step of the Notch signalling pathway that is affected by PS1. Moreover, several gamma-secretase inhibitors block this same step in Notch processing, indicating that related protease activities are responsible for cleavage within the predicted transmembrane domains of Notch and APP. Thus the targeting of gamma-secretase for the treatment of Alzheimer's disease may risk toxicity caused by reduced Notch signalling.