␥-Secretase is a multisubunit aspartyl protease complex that catalyzes intramembrane cleavage of -amyloid precursor protein (APP), a substrate key to Alzheimer's disease pathogenesis, and of Notch, a substrate crucial for cell differentiation. How ␥-secretase recognizes and selects substrates is currently barely understood. Recent data suggest that its subunit nicastrin serves as an initial substrate receptor, which might subsequently forward substrates to the active site domain located in its catalytic subunit presenilin (PS), where an additional substrate binding site has been proposed. We now used an active site domain swapping approach of PS1 with its most distant homolog, spermatogenesis defective (SPE-4), to identify sequence determinants in this region. Strikingly, when the active site domain of PS1 was exchanged with that of SPE-4, the chimeric protein, PS1/SPE-4 6/7 , supported APP but not Notch processing. In addition, PS1/SPE-4 6/7 was strongly impaired in Caenorhabditis elegans Notch signaling in vivo. Mapping experiments identified a single amino acid at position x of the GxGD motif, which contains one of the two active site aspartates, to be responsible for the observed defect in Notch processing and signaling. Our data thus implicate a role of the GxGD motif in catalytic function and substrate identification of ␥-secretase.