We have developed a pair of cell-based reporter gene assays to quantitatively measure γ-secretase cleavage of distinct substrates. This manuscript describes procedures that may be used to monitor γ-secretase-mediated cleavage of either APP-C99 or Notch, using a Gal4 promoter-driven firefly luciferase reporter system. These assays were established by stably co-transfecting HEK293 cells with the Gal4-driven luciferase reporter gene and either the Gal4/VP16-tagged C-terminal fragment of APP (APP-C99; CG cells), or the Gal4/VP16-tagged Notch-ΔE (NΔE; NG cells). Using these reporter assays in parallel, we have demonstrated that an ErbB2 inhibitor, CL-387,785, can preferentially suppress γ-secretase cleavage of APP-C99 in CG cells, but not NΔE in NG cells. The differential responses exhibited by the CG and NG cells, when treated with CL-387,785, represent a preferred characteristic for γ-secretase modulators, and these responses are in stark contrast to the pan-inhibition of γ-secretase induced by DAPT. Our studies provide direct evidence that γ-secretase activities toward different substrates can be differentiated in a cellular context. These new assays may therefore be useful tools in drug discovery for improved AD therapies.