Gamma-secretase is a member of an unusual class of proteases with intramembrane catalytic sites. This enzyme cleaves many type I membrane proteins, including the amyloid beta-protein (Abeta) precursor (APP) and the Notch receptor. Biochemical and genetic studies have identified four membrane proteins as components of gamma-secretase: heterodimeric presenilin (PS) composed of its N- and C-terminal fragments (PS-NTF/CTF), a mature glycosylated form of nicastrin (NCT), Aph-1, and Pen-2. Recent data from studies in Drosophila, mammalian, and yeast cells suggest that PS, NCT, Aph-1, and Pen-2 are necessary and sufficient to reconstitute gamma-secretase activity. However, many unresolved issues, in particular the possibility of other structural or regulatory components, would be resolved by actually purifying the enzyme. Here, we report a detailed, multistep purification procedure for active gamma-secretase and an initial characterization of the purified protease. Extensive mass spectrometry of the purified proteins strongly suggests that PS-NTF/CTF, mNCT, Aph-1, and Pen-2 are the components of active gamma-secretase. Using the purified gamma-secretase, we describe factors that modulate the production of specific Abeta species: (1) phosphatidylcholine and sphingomyelin dramatically improve activity without changing cleavage specificity within an APP substrate; (2) increasing CHAPSO concentrations from 0.1 to 0.25% yields a approximately 100% increase in Abeta42 production; (3) exposure of an APP-based recombinant substrate to 0.5% SDS modulates cleavage specificity from a disease-mimicking pattern (high Abeta42/43) to a physiological pattern (high Abeta40); and (4) sulindac sulfide directly and preferentially decreases Abeta42 cleavage within the purified complex. Taken together, our results define a procedure for purifying active gamma-secretase and suggest that the lipid-mediated conformation of both enzyme and substrate regulate the production of the potentially neurotoxic Abeta42 and Abeta43 peptides.