Alzheimer's disease is neuropathologically characterized by the presence of neurofibrillary tangles and amyloid plaques in the brain. Amyloid plaques are extracellular deposits primarily composed of the amyloid beta-peptide, which is derived from the amyloid beta-precursor protein (APP) by sequential cleavages at the beta-secretase and gamma-secretase sites. gamma-Secretase cleavage is performed by a high molecular weight protein complex containing presenilin (PS), nicastrin, Aph-1 and Pen-2. The gamma-secretase complex is an unusual transmembrane aspartyl protease that cleaves APP within the transmembrane domain. In addition to APP, a large number of other single membrane-spanning proteins have been shown to be cleaved within their transmembrane domains by the gamma-secretase complex in a process referred to as regulated intramembrane proteolysis. Here we review recent research leading to the identification and understanding of the gamma-secretase complex components with emphasis on PS, which harbors the catalytic site. In addition, we summarize our own work focused on identifying and studying domains in PS1 that are critical for mediating gamma-secretase activity. Biochemical understanding of the gamma-secretase complex is important from a basic biological and physiological point of view, and could help in the development of small molecules that modulate gamma-secretase processing in an APP-specific manner.