Gamma-secretase facilitates the regulated intramembrane proteolysis of select type I membrane proteins that play diverse physiological roles in multiple cell types and tissue. In this study, we used biochemical approaches to examine the distribution of amyloid precursor protein (APP) and several additional gamma-secretase substrates in membrane microdomains. We report that APP C-terminal fragments (CTFs) and gamma-secretase reside in Lubrol WX detergent-insoluble membranes (DIM) of cultured cells and adult mouse brain. APP CTFs that accumulate in cells lacking gamma-secretase activity preferentially associate with DIM. Cholesterol depletion and magnetic immunoisolation studies indicate recruitment of APP CTFs into cholesterol- and sphingolipid-rich lipid rafts, and co-residence of APP CTFs, PS1, and syntaxin 6 in DIM patches derived from the trans-Golgi network. Photoaffinity cross-linking studies provided evidence for the preponderance of active gamma-secretase in lipid rafts of cultured cells and adult brain. Remarkably, unlike the case of APP, CTFs derived from Notch1, Jagged2, deleted in colorectal cancer (DCC), and N-cadherin remain largely detergent-soluble, indicative of their spatial segregation in non-raft domains. In embryonic brain, the majority of PS1 and nicastrin is present in Lubrol WX-soluble membranes, wherein the CTFs derived from APP, Notch1, DCC, and N-cadherin also reside. We suggest that gamma-secretase residence in non-raft membranes facilitates proteolysis of diverse substrates during embryonic development but that the translocation of gamma-secretase to lipid rafts in adults ensures processing of certain substrates, including APP CTFs, while limiting processing of other potential substrates.