Presenilins (PSs) are catalytic components of the γ-secretase complexes that promote the ε-cleavage of cell surface proteins producing cytosolic peptides shown to function in cell signaling and gene expression. In addition, secretase cleavages at γ-sites of amyloid precursor protein substrates produce the amyloid-β (Aβ) peptides found in all people. Aggregation of Aβ peptides form the amyloid fibrils found in amyloid plaques of Alzheimer's disease (AD) patients and aged individuals. A common hypothesis suggests that AD is caused by aggregated Aβ peptides, but treatments with either inhibitors of Aβ production or anti-Aβ antibodies showed no therapeutic value. Importantly, recent evidence [Marambaud et al.: Cell 2003;114:635-645] shows that PS familial AD (FAD) mutations cause a loss of γ-secretase cleavage function at the ε-site of substrates manifested by a decreased production of cytosolic peptides and an accumulation of transmembrane γ-secretase substrates. These data support the hypothesis that PS FAD mutations promote neurotoxicity by inhibiting the γ-secretase-catalyzed ε-cleavage of substrates, thus reducing cell signaling while causing accumulation of membrane-bound cytotoxic peptides. Similar mechanisms may be involved in toxicities observed in clinical trials of γ-secretase inhibitors. A model of allelic interference may explain the dominant negative transmission of neurotoxic loss of function in FAD neurodegeneration.