Using a cell-based assay, we have identified optimal residues and key recognition elements necessary for inhibition of γ-secretase. An (S)-hydroxy group or 3,5-difluorophenylacetyl group at the amino terminus and N-methyltertiary amide moiety at the carboxy terminus provided potent γ-secretase inhibitors with an IC50 <10 nM. [Copyright &y& Elsevier]