Mis-sense mutations of presenilin 1 increase the release of amyloidogenic peptide from amyloid precursor protein (APP) and are a major cause of familial Alzheimer's Disease. Loss-of-function mutations of presenilins in the mouse, Caenorhabditis elegans and Drosophila result in severe developmental defects caused by disturbed Notch signalling. Recent studies suggest that the diverse biological roles of presenilin 1 can be explained at the molecular level by its role in the proteolytic cleavage of the integral membrane domains of Notch and APP. This cleavage is a central switch in Notch signalling, while, for APP, its physiological role remains elusive. Evidence that presenilin 1 itself has catalytic properties could explain many of the biological and biochemical alterations caused by presenilin-1 deficiency or clinical mutations in presenilin 1. However, as presenilins reside in the endoplasmic reticulum and the cleavage of Notch and APP is believed to occur close to the cell membrane, the scientific field now faces a 'spatial paradox'.