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Alzheimer's disease is an age-related pathology associated with accumulation of amyloid-β peptides, products of enzymatic cleavage of amyloid-β precursor protein (APP) by secretases. Several familial mutations causing early onset of the disease have been identified in the APP transmembrane (TM) domain. The mutations influence production of amyloid-β, but the molecular mechanisms of this effect are unclear. The "Australian" (L723P) mutation located in the Ctermini of APP TM domain is associated with autosomaldominant, early onset Alzheimer's disease. Herein, we describe the impact of familial L723P mutation on the structural-dynamic behavior of APP TM domain studied by high-resolution NMR in membrane-mimicking micelles and augmented by molecular dynamics simulations in explicit lipid bilayer. We found L723P mutation to cause local unfolding of the C-terminal turn of the APP TM domain helix and increase its accessibility to water required for cleavage of the protein backbone by γ-secretase in the ε-site, thus switching between alternative ("pathogenic" and "non-pathogenic") cleavage cascades. These findings suggest a straightforward mechanism of the pathogenesis associated with this mutation, and are of generic import for understanding the molecular-level events associated with APP sequential proteolysis resulting in accumulation of the pathogenic forms of amyloid-β. Moreover, age-related onset of Alzheimer's disease can be explained by a similar mechanism, where the effect of mutation is emulated by the impact of local environmental factors, such as oxidative stress and/or membrane lipid composition. Knowledge of the mechanisms regulating generation of amyloidogenic peptides of different lengths is essential for development of novel treatment strategies of the Alzheimer's disease.