Understanding the molecular mechanism of beta-amyloid (Abeta) generation is crucial for Alzheimer's disease pathogenesis as well as for normal APP function. The transmembrane domain (TM) of APP appears to undergo presenilin-dependent gamma-secretase cleavage at two topologically distinct sites: a site in the middle of the TM domain that is crucial for the generation of Abeta-peptides, and a site close to the cytoplasmic border (S3-like/epsilon site) of the TM domain that leads to production of the APP intracellular domain (CTFgamma/AICD). We demonstrate that, in contrast to the unique effect of familial Alzheimer's disease (FAD) mutations in APP on Abeta42 production, some but not all FAD mutations also affect CTFgamma generation. Furthermore, changes in total CTFgamma levels do not correlate with either an increase or a decrease of any Abeta species, and inhibition of Abeta-peptide formation starting from position +1 (Abeta1-x) does not affect CTFgamma production. These results suggest that cleavage at the gamma40/42- and the S3-like sites can be dissociated, and that APP signaling and Abeta production are not tightly linked.