The presenilin-containing γ-secretase complex produces the amyloid β-peptide (Aβ) through intramembrane proteolysis, and >100 presenilin mutations are associated with familial early-onset Alzheimer disease (AD). The question of whether these mutations result in AD through a gain or a loss of function remains highly controversial. Mutations in presenilins increase ratios of 42- to 40-residue Aβ critical to pathogenesis, but other Aβs of 38-49 residues are also formed by γ-secretase. Evidence in cells suggests the protease first cleaves substrate within the transmembrane domain at the ϵ site to form 48- or 49-residue Aβ. Subsequent cleavage almost every three residues from the C terminus is thought to occur along two pathways toward shorter secreted forms of Aβ: Aβ49 → Aβ46 → Aβ43 → Aβ40 and Aβ48 → Aβ45 → Aβ42 → Aβ38. Here we show that the addition of synthetic long Aβ peptides (Aβ45-49) directly into purified preparations of γ-secretase leads to the formation of Aβ40 and Aβ42 whether the protease complex is detergent-solubilized or reconstituted into lipid vesicles, and the ratios of products Aβ42 to Aβ40 follow a pattern consistent with the dual-pathway hypothesis. Kinetic analysis of five different AD-causing mutations in presenilin-1 revealed that all result in drastic reduction of normal carboxypeptidase function. Altered trimming of long Aβ peptides to Aβ40 and Aβ42 by mutant proteases occurs at multiple levels, independent of the effects on initial endoproteolysis at the ϵ site, all conspiring to increase the critical Aβ42/Aβ40 ratio implicated in AD pathogenesis. Taken together, these results suggest that specific reduction of carboxypeptidase function of γ-secretase leads to the gain of toxic Aβ42/Aβ40.