Macromolecular complexes containing presenilins (PS1 and PS2), nicastrin, anterior pharynx defective phenotype 1 (APH-1), and PS enhancer 2 (PEN-2) mediate the intramembranous, ␥-secretase cleavage of -amyloid precursor protein (APP), Notch, and a variety of type 1 membrane proteins. We previously demonstrated that PEN-2 is critical for promoting endoproteolysis of PS1 and that the proximal two-thirds of transmembrane domain (TMD) 1 of PEN-2 is required for binding with PS1. In this study, we sought to identify the structural domains of PS1 that are necessary for binding with PEN-2. To address this issue, we generated a series of constructs encoding PS1 mutants harboring deletions or replacements of specific TMDs of PS1-NTF, and examined the effects of encoded molecules on interactions with PEN-2, stabilization and endoproteolysis of PS1, and ␥-secretase activity. We now show that PS1 TMDs 1 and 2 and the intervening hydrophilic loop are dispensable for binding to PEN-2. Furthermore, analysis of chimeric PS1 molecules that harbor replacements of each TMD with corresponding transmembrane segments from the sterol regulatory element-binding protein cleavage activating protein (SCAP) revealed that the PS1-SCAP TMD4 mutant failed to coimmunoprecipitate endogenous PEN-2, strongly suggesting that the fourth TMD of PS1 is required for interaction with PEN-2. Further mutational analyses revealed that the "NF" sequence within the TMD4 of PS1 is the minimal motif that is required for binding with PEN-2, promoting PS1 endoproteolysis and ␥-secretase activity.The "␥-secretase" complex mediates the intramembranous processing of a number of type 1 membrane proteins, including -amyloid precursor protein (APP) 2 and Notch (for review, see Ref. 1). The ␥-secretase complex consists of presenilins (PS1 and PS2), nicastrin (NCT), anterior pharynx defective phenotype 1 (APH-1), and PS enhancer 2 (PEN-2) (for review, see Ref.2). The demonstration that coexpression of these four molecules in Saccharomyces cerevisiae, an organism lacking any endogenous ␥-secretase activity, is sufficient to reconstitute ␥-secretase activity (3) has confirmed that these four proteins are the essential core components of the catalytic complex.Several lines of evidence have emerged to indicate that the steadystate accumulation of each of the components of the complex is coordinately regulated, and in large part, dependent on the expression of other members of the complex (for review, see Ref. 4). Although the precise functional role of the individual components of the ␥-secretase complex is still not clear, APH-1 and NCT apparently form a stable subcomplex that binds to, and stabilizes, newly synthesized PS1 (5, 6). This APH-1-NCT-PS1 complex then associates with PEN-2, resulting in the proteolytic conversion of ϳ42-50-kDa PS1 holoprotein into ϳ27-30-kDa NH 2 -terminal (NTF) and ϳ16 -20-kDa COOH-terminal (CTF) derivatives (5-9) that are the preponderant PS1-related polypeptides that accumulate in vivo (10 -12). Recent studies have revealed that PEN-2 als...