Mutations in the presenilin 1 (PS1) gene are the major cause of familial Alzheimer s disease (AD). They effect an increased production of the highly neurotoxic 42 amino acid variant of the amyloid-beta peptide (Abeta), which is believed to initiate the disease. Abeta is the product of two consecutive cleavages of the beta-amyloid precursor protein (APP) by two proteases, beta-secretase and gamma-secretase. The latter enzyme has been identified as an intramembrane-cleaving multiprotein complex that apart from APP cleaves a large number of other type I transmembrane proteins. PS1 and its homologue PS2 are essential for gamma-secretase cleavage and more than a decade after their discovery it is now firmly established that they function as catalytic subunits of gamma-secretase. This review recapitulates the findings that led to this conclusion as well as the further progress made on the function of PS as gamma-secretase since then.