Presenilins mediate an unusual intramembranous proteolytic activity known as gamma-secretase, two substrates of which are the Notch receptor (Notch) and the beta-amyloid precursor protein (APP). Gamma-secretase-mediated cleavage of APP, like that of Notch, yields an intracellular fragment [APP intracellular domain (AICD)] that forms a transcriptively active complex. We now demonstrate a functional role for AICD in regulating phosphoinositide-mediated calcium signaling. Genetic ablation of the presenilins or pharmacological inhibition of gamma-secretase activity (and thereby AICD production) attenuated calcium signaling in a dose-dependent and reversible manner through a mechanism involving the modulation of endoplasmic reticulum calcium stores. Cells lacking APP (and hence AICD) exhibited similar calcium signaling deficits, and-notably-these disturbances could be reversed by transfection with APP constructs containing an intact AICD, but not by constructs lacking this domain. Our findings indicate that the AICD regulates phosphoinositide-mediated calcium signaling through a gamma-secretase-dependent signaling pathway, suggesting that the intramembranous proteolysis of APP may play a signaling role analogous to that of Notch.