To differentiate multiple activities of presenilin 1 (PS1), we generated transgenic mice expressing two human PS1 alleles: one with the aspartate to alanine mutation at residue 257 (hPS1D257A) that impairs the proteolytic activity of PS1, and the other deleting amino acids 340-371 of the hydrophilic loop sequence (hPS1Deltacat) essential for beta-catenin interaction. We show here that although hPS1Deltacat is fully competent in rescuing the PS1-null lethal phenotype, hPS1D257A does not exhibit developmental activity. hPS1D257A also leads to the concurrent loss of the proteolytic processing of Notch and beta-amyloid precursor protein (APP) and the generation of beta-amyloid peptides (Abeta). Further, by measuring the levels of endogenous Abeta(X-40) and Abeta(X-42) in primary neuronal cultures, we confirmed the concept that PS1 is indispensable for the production of secreted Abeta.