The gamma (gamma)-secretase holoenzyme is composed of four core proteins and cleaves APP to generate amyloid beta (A beta), a key molecule that causes major neurotoxicity during the early stage of Alzheimer's disease (AD). However, despite its important role in A beta production, little is known about the regulation of gamma-secretase. OCIAD2, a novel modulator of gamma-secretase that stimulates A beta production, and which was isolated from a genome-wide functional screen using cell-based assays and a cDNA library comprising 6,178 genes. Ectopic expression of OCIAD2 enhanced A beta production, while reduction of OCIAD2 expression suppressed it. OCIAD2 expression facilitated the formation of an active gamma-secretase complex and enhanced subcellular localization of the enzyme components to lipid rafts. OCIAD2 interacted with nicastrin to stimulate gamma-secretase activity. OCIAD2 also increased the interaction of nicastrin with C99 and stimulated APP processing via gamma-secretase activation, but did not affect Notch processing. In addition, a cell-permeable Tat-OCIAD2 peptide that interfered with the interaction of OCIAD2 with nicastrin interrupted the gamma-secretase-mediated AICD production. Finally, OCIAD2 expression was significantly elevated in the brain of AD patients and PDAPP mice. This study identifies OCIAD2 as a selective activator of gamma-secretase to increase A beta generation.