Presenilin-1 (PS1) or presenilin-2 (PS2), nicastrin (NCT), anterior pharynx-defective 1 (Aph-1), and presenilin enhancer-2 (Pen-2) have been considered the minimal essential subunits required to form an active γ-secretase complex. Besides PS, which has been widely believed to function as the catalytic subunit of the complex, the functional roles of the other subunits in the γ-secretase complex remain debatable. In the current study, we set out to determine the role of Pen-2 in γ-secretase activity. To this end, using knockout cells in combination with siRNA and immunoprecipitation approaches, our results revealed that Pen-2 together with presenilin are sufficient to form a functionally active enzyme to process Notch. Specifically, our data demonstrated that Pen-2 plays a crucial role in substrate binding, a mechanism by which Pen-2 contributes directly to the catalytic mechanism of γ-secretase activity. Our data also suggested that there may be different requirements for components to process AβPP and Notch. This information would be important for therapeutic strategy aimed at inhibition or modulation of γ-secretase activity.