Genetic and biological studies provide strong evidence that the deposition of amyloid-beta peptide (Abeta) contributes to the etiology of Alzheimer's disease (AD). Abeta is generated from amyloid-beta precursor protein by beta- and gamma-secretases, which are plausible molecular targets for AD treatment. Thus, drugs that regulate the production of Abeta by inhibiting or modulating secretase activity could provide effective therapeutics for AD. Both secretases are transmembrane proteases: beta-site amyloid-beta precursor protein cleaving enzyme 1, the main neuronal beta-secretase, is a single span transmembrane aspartyl protease; gamma-secretase is a multiprotein complex comprising four core subunits that are all transmembrane proteins: presenilin, nicastrin, anterior pharynx-defective 1 and presenilin enhancer 2. Molecular biochemical, enzymological and genetic analyses reveal the molecular mechanisms of these secretases in the generation of Abeta. Moreover, extensive drug screening and development have enabled some secretase inhibitors and modulators to advance into late-Phase clinical trials. This review focuses on recent progresses in beta- and gamma-secretase biology, including the proteolytic mechanism, regulation and composition of these enzymes. Moreover, this review discusses the recent development of inhibitors, and provides a direction for the effective treatment of AD through inhibition/modulation of beta- and gamma-secretase activities.