γ-Secretase is essential for the generation of the neurotoxic 42-amino acid amyloid β-peptide (Aβ(42)). The aggregation-prone hydrophobic peptide, which is deposited in Alzheimer disease (AD) patient brain, is generated from a C-terminal fragment of the β-amyloid precursor protein by an intramembrane cleavage of γ-secretase. Because Aβ(42) is widely believed to trigger AD pathogenesis, γ-secretase is a key AD drug target. Unlike inhibitors of the enzyme, γ-secretase modulators (GSMs) selectively lower Aβ(42) without interfering with the physiological function of γ-secretase. The molecular target(s) of GSMs and hence the mechanism of GSM action are not established. Here we demonstrate by using a biotinylated photocross-linkable derivative of highly potent novel second generation GSMs that γ-secretase is a direct target of GSMs. The GSM photoprobe specifically bound to the N-terminal fragment of presenilin, the catalytic subunit of γ-secretase, but not to other γ-secretase subunits. Binding was differentially competed by GSMs of diverse structural classes, indicating the existence of overlapping/multiple GSM binding sites or allosteric alteration of the photoprobe binding site. The β-amyloid precursor protein C-terminal fragment previously implicated as the GSM binding site was not targeted by the compound. The identification of presenilin as the molecular target of GSMs directly establishes allosteric modulation of enzyme activity as a mechanism of GSM action and may contribute to the development of therapeutically active GSMs for the treatment of AD.