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Deciphering the mechanism by which the relative Aβ42(43) to total Aβ ratio is regulated is central to understanding Alzheimer disease (AD) etiology; however, the mechanisms underlying changes in the Aβ42(43) ratio caused by familial mutations and γ-secretase modulators (GSMs) are unclear. Here, we show in vitro and in living cells that presenilin (PS)/γ-secretase cleaves Aβ42 into Aβ38, and Aβ43 into Aβ40 or Aβ38. Approximately 40% of Aβ38 is derived from Aβ43. Aβ42(43) cleavage is involved in the regulation of the Aβ42(43) ratio in living cells. GSMs increase the cleavage of PS/γ-secretase-bound Aβ42 (increase kcat) and slow its dissociation from the enzyme (decrease kb), whereas PS1 mutants and inverse GSMs show the opposite effects. Therefore, we suggest a concept to describe the Aβ42(43) production process and propose how GSMs act, and we suggest that a loss of PS/γ-secretase function to cleave Aβ42(43) may initiate AD and might represent a therapeutic target.