γ-Secretase generates the peptides of Alzheimer's disease, Aβ(40) and Aβ(42), by cleaving the amyloid precursor protein within its transmembrane domain. γ-Secretase also cleaves numerous other substrates, raising concerns about γ-secretase inhibitor off-target effects. Another important class of drugs, γ-secretase modulators, alter the cleavage site of γ-secretase on amyloid precursor protein, changing the Aβ(42)/Aβ(40) ratio, and are thus a promising therapeutic approach for Alzheimer's disease. However, the target for γ-secretase modulators is uncertain, with some data suggesting that they function on γ-secretase, whereas others support their binding to the amyloid precursor. In this paper we address this controversy by using a fluorescence resonance energy transfer-based assay to examine whether γ-secretase modulators alter Presenilin-1/γ-secretase conformation in intact cells in the absence of its natural substrates such as amyloid precursor protein and Notch. We report that the γ-secretase allosteric site is located within the γ-secretase complex, but substrate docking is needed for γ-secretase modulators to access this site.