Notch receptors and the amyloid precursor protein are type I membrane proteins that are proteolytically cleaved within their transmembrane domains by a presenilin (PS)-dependent gamma-secretase activity. In both proteins, two peptide bonds are hydrolyzed: one near the inner leaflet and the other in the middle of the transmembrane domain. Under saturating conditions the substrates compete with each other for proteolysis, but not for binding to PS. At least some Alzheimer's disease-causing PS mutations reside in proteins possessing low catalytic activity. We demonstrate (i) that differentially tagged PS molecules coimmunoprecipitate, and (ii) that PS N-terminal fragment dimers exist by using a photoaffinity probe based on a transition state analog gamma-secretase inhibitor. We propose that gamma-secretase contains a PS dimer in its catalytic core, that binding of substrate is at a site separate from the active site, and that substrate is cleaved at the interface of two PS molecules.