γ-Secretase is a multisubunit membrane protein complex containing presenilin (PS1) as a catalytic subunit. Familial Alzheimer disease (FAD) mutations within PS1 were analyzed in yeast cells artificially expressing membrane-bound substrate, amyloid precursor protein, or Notch fused to Gal4 transcriptional activator. The FAD mutations, L166P and G384A (Leu-166 to Pro and Gly-384 to Ala substitution, respectively), were loss-of-function in yeast. We identified five amino acid substitutions that suppress the FAD mutations. The cleavage of amyloid precursor protein or Notch was recovered by the secondary mutations. We also found that secondary mutations alone activated the γ-secretase activity. FAD mutants with suppressor mutations, L432M or S438P within TMD9 together with a missense mutation in the second or sixth loops, regained γ-secretase activity when introduced into presenilin null mouse fibroblasts. Notably, the cells with suppressor mutants produced a decreased amount of Aβ42, which is responsible for Alzheimer disease. These results indicate that the yeast system is useful to screen for mutations and chemicals that modulate γ-secretase activity.