γ-Secretase processing of the amyloid-β precursor protein (APP) releases the amyloid-β peptide, which is widely held to be involved in the pathogenesis of Alzheimer’s disease. This protease is apparently a complex of integral membrane proteins that includes the multi-pass presenilin. Transition-state analogue inhibitors of γ-secretase are important molecular probes of the enzyme active site. We have identified new transition-state analogues, (hydroxyethy) urea peptidomimetics, that inhibit γ-secretase activity at submicromolar concentrations in cell culture. The inhibitory activity of a family of such compounds provided further support that γ-secretase has loose sequence specificity at the active site, and one of these compounds allowed partial purification of the protease complex. In addition, becuase the site of γ-secretase cleavage of APP lies within its single transmembrane domain, we designed short peptides based on this domain which assume a helical conformation. These peptides inhibited γ-secretase in the low micromolar range in cell culture, suggesting that they indeed mimick the APP substrate conformation.