Accumulation of the amyloid beta-peptide (Abeta) in the brain is believed to initiate a series of neurotoxic events that causes neurodegeneration in Alzheimer's disease (AD). Abeta is generated by processing of the beta-amyloid precursor protein (APP) through the successive action of two proteolytic enzymes, beta-secretase and gamma-secretase. While beta-secretase has been identified as the membrane-bound aspartyl protease BACE, the identity of gamma-secretase, which catalyzes the final, intramembrane cleavage of APP as well as of several other type I transmembrane proteins, has been enigmatic for a long time. Exciting progress has been made in the past year towards its uncovering. Genetics paved the way for subsequent biochemical reconstitution studies that demonstrated that gamma-secretase is a protein complex composed of presenilin (PS), nicastrin (NCT), APH-1 and PEN-2. Thus, the complete set of genes that is required to generate Abeta from its precursor has now ultimately been identified. PS carries the active site of gamma-secretase and is a founding member of a novel class of polytopic aspartyl proteases that utilize a non-classical active site to cleave their membrane-tethered substrates. The other components are required for assembly, stabilization and maturation of the complex and NCT may be involved in the recognition of gamma-secretase substrates.