γ-Secretase is an aspartyl intramembranal protease composed of presenilin, Nicastrin, Aph1 and Pen2 with 19 transmembrane domains. γ-Secretase cleaves the amyloid precursor proteins (APP) to release Aβ peptides that likely play a causative role in the pathogenesis of Alzheimer disease (AD). In addition, γ-secretase cleaves Notch and other type I membrane proteins. γ-Secretase inhibitors (GSIs) have been developed and used for clinical studies. However, clinical trials have shown adverse effects of GSIs that are potentially linked with non-discriminatory inhibition of Notch signaling, overall APP processing and other substrate cleavages. Therefore, these findings call for the development of disease modifying agents that target γ-secretase activity to lower Aβ42 production without blocking the overall processing of γ-secretase substrates. γ-Secretase modulators (GSMs) originally derived from non-steroidal anti-inflammatory drugs (NSAIDs) display such characteristics and are the focus of this review. However, first generation GSMs have limited potential due to low potency and undesired neuropharmacokinetic properties. This generation of GSMs has been suggested to interact with the APP substrate, γ-secretase or both. To improve the potency and brain availability, second generation GSMs including NSAID-derived carboxylic acid and non-NSAID-derived heterocyclic chemotypes as well as natural product-derived GSMs have been developed. Animal studies of this generation of GSMs have shown encouraging preclinical profiles. Moreover, using potent GSM photoaffinity probes, multiple studies unambiguously have showed that both carboxylic acid and heterocyclic GSMs specifically target presenilin, the catalytic subunit of γ-secretase. In addition, two types of GSMs have distinct binding sites within the γ-secretase complex and exhibit different Aβ profiles. GSMs induce a conformational change of γ-secretase to achieve modulation. Various models are proposed and discussed. Despite the progress of GSM research, many outstanding issues remain to be investigated to achieve the ultimate goal of developing GSMs as effective AD therapies.