Presenilin1 (PS1) is a component of the γ-secretase complex mutated in cases of Familial Alzheimer's disease (FAD). PS1 is synthesized as a 50 kDa peptide subsequently processed to two 29 and 20 kDa subunits that remain associated. Processing of PS1 is inhibited by several mutations detected in FAD patients. PS1 acts as negative modulator of β-catenin·Tcf-4n transcriptional activity. In this article we show that in murine embryonic fibroblasts (MEFs) the mechanisms of action of the processed and non-processed forms of PS1 on β-catenin·Tcf-4 transcription are different. Whereas non-processed PS1 inhibits β-catenin·Tcf-4 activity through a mechanism independent of γ-secretase and associated with the interaction of this protein with plakoglobin and Tcf-4, the effect of processed PS1 is prevented by γ-secretase inhibitors, and requires its interaction with E- or N-cadherin and the generation of cytosolic terminal fragments of these two cadherins, which in turn destabilize the β-catenin transcriptional cofactor CBP. Accordingly, the two forms of PS1 interact differently with E-cadherin or β-catenin and plakoglobin: whereas processed PS1 binds E-cadherin with high affinity and β-catenin or plakoglobin weakly, the non-processed form behaves inversely. Moreover, contrarily to processed PS1, that decreases the levels of c-fos RNA, non-processed PS1 inhibits the expression c-myc, a known target of β-catenin·Tcf-4, and does not block the activity of other transcriptional factors requiring CBP. These results indicate that prevention of PS1 processing in FAD affects the mechanism of repression of the transcriptional activity dependent on β-catenin. © 2008 Raurell et al.