Sequential processing of the amylold precursor protein (APP) by beta- and gamma -secretases generates the A beta peptide, a major constituent of the senile plaques observed in Alzheimer's disease. The cleavage by gamma -secretase also results in the cytoplasmic release of a 59- or 57-residue-long C-terminal fragment (C gamma). This processing resembles regulated intramembrane proteolysis of transmembrane proteins such as Notch, where the released cytoplasmic fragments enter the nucleus and modulate gene expression. Here, we examined whether the analogous C gamma fragments of APP also exert effects in the nucleus. We find that ectopically expressed C gamma is present both in the cytoplasm and in the nucleus. Interestingly, expression of C gamma 59 causes disappearance of PAT1, a protein that interacts with the APP cytoplasmic domain, from the nucleus and induces its proteosomal degradation. Treatment of cells with lactacystin prevents PAT1 degradation and retains its nuclear localization. By contrast, C gamma 57, a minor product of gamma -cleavage, is only marginally effective in PAT1 degradation. Furthermore, C gamma 59 but not C gamma 57 potently represses retinoic acid-responsive gene expression. Thus, our studies provide the evidence that, as predicted by the regulated intramembrane proteolysis mechanism, C gamma seems to function in the nucleus.