gamma-Secretase is an unusual protease with an intramembrane catalytic site that cleaves many type I membrane proteins, including the amyloid beta-protein (Abeta) precursor (APP) and the Notch receptor. Genetic and biochemical studies have identified four membrane proteins as components of gamma-secretase: heterodimeric presenilin composed of its N- and C-terminal fragments, nicastrin, Aph-1, and Pen-2. Here we demonstrated that certain compounds, including protein kinase inhibitors and their derivatives, act directly on purified gamma-secretase to selectively block cleavage of APP- but not Notch-based substrates. Moreover, ATP activated the generation of the APP intracellular domain and Abeta, but not the generation of the Notch intracellular domain by the purified protease complex, and was a direct competitor of the APP-selective inhibitors, as were other nucleotides. In accord, purified gamma-secretase bound specifically to an ATP-linked resin. Finally, a photoactivable ATP analog specifically labeled presenilin 1-C-terminal fragments in purified gamma-secretase preparations; the labeling was blocked by ATP itself and APP-selective gamma-secretase inhibitors. We concluded that a nucleotide-binding site exists within gamma-secretase, and certain compounds that bind to this site can specifically modulate the generation of Abeta while sparing Notch. Drugs targeting the gamma-secretase nucleotide-binding site represent an attractive strategy for safely treating Alzheimer disease.