γ-Secretase inhibition represents a major therapeutic strategy for lowering amyloid β (Aβ) peptide production in Alzheimer's disease (AD). Progress toward clinical use of γ-secretase inhibitors has, however, been hampered due to mechanism-based adverse events, primarily related to impairment of Notch signaling. The γ-secretase inhibitor MRK-560 represents an exception as it is largely tolerable in vivo despite displaying only a small selectivity between Aβ production and Notch signaling in vitro. In exploring the molecular basis for the observed tolerability, we show that MRK-560 displays a strong preference for the presenilin 1 (PS1) over PS2 subclass of γ-secretases and is tolerable in wild-type mice but causes dose-dependent Notch-related side effect in PS2-deficient mice at drug exposure levels resulting in a substantial decrease in brain Aβ levels. This demonstrates that PS2 plays an important role in mediating essential Notch signaling in several peripheral organs during pharmacological inhibition of PS1 and provide preclinical in vivo proof of concept for PS2-sparing inhibition as a novel, tolerable and efficacious γ-secretase targeting strategy for AD.