The presenilin (PS)-dependent site 3 (S3) cleavage of Notch liberates its intracellular domain (NICD), which is required for Notch signaling. The similar γ-secretase cleavage of the β-amyloid precursor protein (βAPP) results in the secretion of amyloid β-peptide (Aβ). However, little is known about the corresponding C-terminal cleavage product (CTFγ). We have now identified CTFγ in brain tissue, in living cells, as well as in an in vitro system. Generation of CTFγ is facilitated by PSs, since a dominant-negative mutation of PS as well as a PS gene knock out prevents its production. Moreover, γ-secretase inhibitors, including one that is known to bind to PS, also block CTFγ generation. Sequence analysis revealed that CTFγ is produced by a novel γ-secretase cut, which occurs at a site corresponding to the S3 cleavage of Notch.