Gamma-secretase is a multi-component enzyme complex that performs an intramembranous cleavage, releasing amyloid-beta (Abeta) peptides from processing intermediates of the beta-amyloid precursor protein. Because Abeta peptides are thought to be causative for Alzheimer's disease, inhibiting gamma-secretase represents a potential treatment for this neurodegenerative condition. Whereas inhibitors directed at the active center of gamma-secretase inhibit the cleavage of all its substrates, certain non-steroidal antiinflammatory drugs (NSAIDs) have been shown to selectively reduce the production of the more amyloidogenic Abeta(1-42) peptide without inhibiting alternative cleavages. In contrast to the majority of previous studies, however, we demonstrate that in cell-free systems the mode of action of selected NSAIDs and their derivatives, depending on the concentrations used, can either be classified as modulatory or inhibitory. At modulatory concentrations, a selective and, with respect to the substrate, noncompetitive inhibition of Abeta(1-42) production was observed. At inhibitory concentrations, on the other hand, biochemical readouts reminiscent of a nonselective gamma-secretase inhibition were obtained. When these compounds were analyzed for their ability to displace a radiolabeled, transition-state analog inhibitor from solubilized enzyme, noncompetitive antagonism was observed. The allosteric nature of radioligand displacement suggests that NSAID-like inhibitors change the conformation of the gamma-secretase enzyme complex by binding to a novel site, which is discrete from the binding site for transition-state analogs and therefore distinct from the catalytic center. Consequently, drug discovery efforts aimed at this site may identify novel allosteric inhibitors that could benefit from a wider window for inhibition of gamma (42)-cleavage over alternative cleavages in the beta-amyloid precursor protein and, more importantly, alternative substrates.