Presenilins (PS) are the catalytic components of γ-secretase complexes that mediate intramembrane proteolysis. Mutations in the PS genes are a major cause of familial early-onset Alzheimer disease and affect the cleavage of the amyloid precursor protein, thereby altering the production of the amyloid β-peptide. However, multiple additional protein substrates have been identified, suggesting pleiotropic functions of γ-secretase. Here, we demonstrate that inhibition of γ-secretase causes dysregulation of cellular lipid homeostasis, including up-regulation of liver X receptors, and complex changes in the cellular lipid composition. Genetic and pharmacological inhibition of γsecretase leads to strong accumulation of cytoplasmic lipid droplets, associated with increased levels of acylglycerols, but lowered cholesteryl esters. Furthermore, accumulation of lipid droplets was augmented by increasing levels of amyloid precursor protein C-terminal fragments, indicating a critical involvement of this γ-secretase substrate. Together, these data provide a mechanism that functionally connects γ-secretase activity to cellular lipid metabolism. These effects were also observed in human astrocytic cells, indicating an important function of γ-secretase in cells critical for lipid homeostasis in the brain.