BACKGROUND AND PURPOSE γ‐Secretase modulators represent a promising therapeutic approach for Alzheimer's disease (AD) because they selectively decrease amyloid β 42 (Aβ42), a particularly neurotoxic Aβ species that accumulates in plaques in the brains of patients with AD. In the present study, we describe the in vitro and in vivo pharmacological properties of a potent novel γ‐secretase modulator, 2‐(S)‐(3,5‐bis(4‐(trifluoromethyl)phenyl)phenyl)‐4‐methylpentanoic acid (JNJ‐40418677). EXPERIMENTAL APPROACH The potency and selectivity of JNJ‐40418677 for Aβ reduction was investigated in human neuroblastoma cells, rat primary neurones and after treatment with single oral doses in non‐transgenic mouse brains. To evaluate the effect of JNJ‐40418677 on plaque formation, Tg2576 mice were treated from 6 until 13 months of age via the diet. KEY RESULTS JNJ‐40418677 selectively reduced Aβ42 secretion in human neuroblastoma cells and rat primary neurones, but it did not inhibit Notch processing or formation of other amyloid precursor protein cleavage products. Oral treatment of non‐transgenic mice with JNJ‐40418677 resulted in an excellent brain penetration of the compound and a dose‐ and time‐dependent decrease of brain Aβ42 levels. Chronic treatment of Tg2576 mice with JNJ‐40418677 reduced brain Aβ levels, the area occupied by plaques and plaque number in a dose‐dependent manner compared with transgenic vehicle‐treated mice. CONCLUSIONS AND IMPLICATIONS JNJ‐40418677 selectively decreased Aβ42 production, showed an excellent brain penetration after oral administration in mice and lowered brain Aβ burden in Tg2576 mice after chronic treatment. JNJ‐40418677 therefore warrants further investigation as a potentially effective disease‐modifying therapy for AD.