␥-Secretase is a proteolytic membrane complex that processes a variety of substrates including the amyloid precursor protein and the Notch receptor. Earlier we showed that one of the components of this complex, nicastrin (NCT), functions as a receptor for ␥-secretase substrates. A recent report challenged this, arguing instead that the Glu-333 residue of NCT predicted to participate in substrate recognition only participates in ␥-secretase complex maturation and not in activity per se. Here, we present evidence that Glu-333 directly participates in ␥-secretase activity. By normalizing to the active pool of ␥-secretase with two separate methods, we establish that ␥-secretase complexes containing NCT-E333A are indeed deficient in intrinsic activity. We also demonstrate that the NCT-E333A mutant is deficient in its binding to substrates. Moreover, we find that the cleavage of substrates by ␥-secretase activity requires a free N-terminal amine but no minimal length of the extracellular N-terminal stub. Taken together, these studies provide further evidence supporting the role of NCT in substrate recognition. Finally, because ␥-secretase cleaves itself during its maturation and because NCT-E333A also shows defects in ␥-secretase complex maturation, we present a model whereby Glu-333 can serve a dual role via similar mechanisms in the recruitment of both Type 1 membrane proteins for activity and the presenilin intracellular loop during complex maturation.The brains of Alzheimer disease patients are characterized by dense neuritic plaques that consist of the insoluble -amyloid peptide (A) 2 and neurons containing neurofibrillary tangles of the Tau protein (1, 2). The A peptide is produced via the sequential proteolysis of APP by -and ␥-secretase (3).␥-secretase is a multisubunit complex consisting of at least four proteins: presenilin (PS), NCT, APH-1, and PEN-2, all of which are necessary and sufficient for activity (4 -9). The formation of the ␥-secretase complex is tightly controlled, with an ordered assembly of subunits coupled to spatial restriction (10). It is believed that the last step of the complicated ␥-secretase maturation and activation process involves in cis endoproteolysis of the PS holoprotein (11-13). It is this form of ␥-secretase with PS in its N-and C-terminal fragments (NTF and CTF, respectively) that represents the fully mature, proteolytically active enzyme.␥-Secretase is a unique protease that cleaves within the lipid bilayer a large number of Type 1 single transmembrane-spanning proteins that vary widely in their sequence and size (14 -16). In a previous report, we demonstrated that NCT functions as a substrate receptor for ␥-secretase (4). In that report, we showed that NCT recruits substrates that have had their large extracellular domains first removed by an upstream protease in a process termed "ectodomain shedding." This process generates a new, short extracellular stub with a free N terminus, which is required for proteolysis by ␥-secretase. We also established that Glu-333 of NCT pa...