Biochemical, pathogenic and human genetic data confirm that GSAP (γ-secretase activating protein), a selective γ-secretase modulatory protein, plays important roles in Alzheimer’s disease (AD) and Down syndrome. However, the molecular mechanism(s) underlying GSAP-dependent pathogenesis remains largely elusive. Here, through unbiased proteomics and single-nuclei RNA-seq, we identified that GSAP regulates multiple biological pathways, including protein phosphorylation, trafficking, lipid metabolism, and mitochondrial function. We demonstrated that GSAP physically interacts with Fe65:APP complex to regulate APP trafficking/partitioning. GSAP is enriched in the mitochondria-associated membrane (MAM) and regulates lipid homeostasis through the amyloidogenic processing of APP. GSAP deletion generates a lipid environment unfavorable for AD pathogenesis, leading to improved mitochondrial function and the rescue of cognitive deficits in an AD mouse model. Finally, we identified a novel GSAP single-nucleotide polymorphism that regulates its brain transcript level and is associated with an increased AD risk. Together, our findings indicate that GSAP impairs mitochondrial function through its MAM localization, and lowering GSAP expression reduces pathological effects associated with AD.