The accumulation and deposition of fibrillar Abeta is thought the primary cause of Alzheimer's disease (AD). Abeta is generated by sequential proteolytic processing involving beta- and gamma-secretase on Amyloid beta protein precursor (APP). Recently, gamma-secretase was shown to cleave near the cytoplasmic membrane boundary of APP, called epsilon-site cleavage, as well as in the middle of the membrane domain, called gamma-site cleavage. Recent findings indicate that gamma- and epsilon-site cleavage are regulated independently. In this review, the reduction of epsilon-site cleavage in AD and the importance of epsilon-site cleavage are discussed.