The Notch family of proteins consists of transmembrane receptors that play a critical role in the determination of cell fate. Genetic studies in Caenorhabditis elegans suggest that the presenilin proteins, which are associated with familial Alzheimer’s disease, regulate Notch signaling. Here we show that proteolytic release of the Notch-1 intracellular domain (NICD), an essential step in the activation of Notch signaling, is markedly reduced in presenilin-1 (PS1)-deficient cells and is restored by PS1 expression. Nuclear translocation of the NICD is also markedly reduced in PS1-deficient cells, resulting in reduced transcriptional activation. Mutations in PS1 that are associated with familial Alzheimer’s disease impair the ability of PS1 to induce proteolytic release of the NICD and nuclear translocation of the cleaved protein. These results suggest that PS1 plays a central role in the proteolytic activation of the Notch-1-signaling pathway and that this function is impaired by pathogenic PS1 mutations. Thus, dysregulation of proteolytic function may underlie the mechanism by which presenilin mutations cause Alzheimer’s disease.