Mutations in Pkd1, encoding polycystin-1 (PC1), cause autosomal-dominant polycystic kidney disease (ADPKD). We show that the carboxy-terminal tail (CTT) of PC1 is released by γ-secretase-mediated cleavage and regulates the Wnt and CHOP pathways by binding the transcription factors TCF and CHOP, disrupting their interaction with the common transcriptional coactivator p300. Loss of PC1 causes increased proliferation and apoptosis, while reintroducing PC1-CTT into cultured Pkd1 null cells reestablishes normal growth rate, suppresses apoptosis, and prevents cyst formation. Inhibition of γ-secretase activity impairs the ability of PC1 to suppress growth and apoptosis and leads to cyst formation in cultured renal epithelial cells. Expression of the PC1-CTT is sufficient to rescue the dorsal body curvature phenotype in zebrafish embryos resulting from either γ-secretase inhibition or suppression of Pkd1 expression. Thus, γ-secretase-dependent release of the PC1-CTT creates a protein fragment whose expression is sufficient to suppress ADPKD-related phenotypes in vitro and in vivo.