γ-Secretase cleaves the carboxyl-terminal fragment (βCTF) of APP not only in the middle of the transmembrane domain (γ-cleavage), but also at sites close to the membrane/cytoplasm boundary (ε-cleavage), to produce the amyloid β protein (Aβ) and the APP intracellular domain (AICD), respectively. The AICD49–99 and AICD50–99 species were identified as counterparts of the long Aβ species Aβ48 and Aβ49, respectively. We found that Aβ40 and AICD50–99 were the predominant species in cells expressing wild-type APP and presenilin, whereas the production of Aβ42 and AICD49–99 was enhanced in cells expressing familial Alzheimer’s disease mutants of APP and presenilin. These long Aβ species were identified in cell lysates and mouse brain extracts, which suggests that ε-cleavage is the first cleavage of βCTF to produce Aβ by γ-secretase. Here, we review the progress of research on the mechanism underlying the proteolysis of the APP transmembrane domain based on tri- and tetrapeptide release.