Two secretases are involved in the generation of amyloid beta-peptide, the principal component of amyloid plaques in the brains of Alzheimer's disease patients. While beta-secretase is a classical aspartyl protease, gamma-secretase activity is associated with a high molecular weight complex. One of the complex components, which is critically required for gamma-secretase activity is nicastrin (NCT). Here we investigate the assembly of NCT into the gamma-secretase complex. NCT mutants either lacking the entire cytoplasmic tail, the cytoplasmic tail, and the transmembrane domain (TMD), or containing a set of heterologous TMDs were expressed in cells with strongly reduced levels of endogenous NCT. Maturation of exogenous NCT, gamma-secretase complex formation and proteolytic function was then investigated. This revealed that the cytoplasmic tail of NCT is dispensable for gamma-secretase complex assembly and function. In contrast, the authentic TMD of NCT is critically required for the interaction with gamma-secretase complex components and for formation of an active gamma-secretase complex. Neither soluble NCT lacking any membrane anchor nor NCT containing a heterologous TMD were inserted into the gamma-secretase complex. We identified the N-terminal region of the NCT TMD as a functionally important entity of NCT. These data thus demonstrate that NCT interacts with other gamma-secretase complex components via its TMD.