Cholesterol has been claimed to be involved in the generation and/or accumulation of amyloid beta protein (Abeta). However, the underlying molecular mechanisms have not been fully elucidated yet. Here, we have investigated the effect of membrane cholesterol content on gamma-secretase activity using Chinese hamster ovary cells stably expressing beta-amyloid precursor protein (APP) and either wild-type or N141I mutant-type presenilin 2. Cholesterol was acutely depleted from the isolated membrane by methyl-beta-cyclodextrin, and Abeta production was assessed in a cell-free assay system. Reduced cholesterol did not significantly alter the amounts of Abeta produced by either total cell membranes or cholesterol-rich low-density membrane domains. Even its extremely low levels in the latter domains did not affect Abeta production. This indicates that the membrane cholesterol content does not directly modulate the activity of gamma-secretase. To ascertain that gamma-secretase resides in cholesterol-rich membrane domains, low-density membrane domains were further fractionated with BCtheta (biotinylated theta-toxin nicked with subtilisin Carlsberg protease), which has recently been shown to bind selectively to rafts of intact cells. The membrane domains purified with BCtheta did indeed produce Abeta. These observations indicate that the gamma-cleavage required for generating Abeta occurs in rafts, but its activity is virtually cholesterol-independent.