Alzheimer's disease (AD) is the most common form of dementia and is characterized pathologically by the accumulation of beta-amyloid (Abeta) plaques and neurofibrillary tangles in the brain. Genetic studies of AD first highlighted the importance of the presenilins (PS). Subsequent functional studies have demonstrated that PS form the catalytic subunit of the gamma-secretase complex that produces the Abeta peptide, confirming the central role of PS in AD biology. Here, we review the studies that have characterized PS function in the gamma-secretase complex in Caenorhabditis elegans, mice and in in vitro cell culture systems, including studies of PS structure, PS interactions with substrates and other gamma-secretase complex members, and the evidence supporting the hypothesis that PS are aspartyl proteases that are active in intramembranous proteolysis. A thorough knowledge of the mechanism of PS cleavage in the context of the gamma-secretase complex will further our understanding of the molecular mechanisms that cause AD, and may allow the development of therapeutics that can alter Abeta production and modify the risk for AD.