Aberrant cleavage of Notch by γ-secretase is implicated in numerous diseases, but how cleavage is regulated in space and time is unclear. Here, we report that cadherin-based adherens junctions (cadAJs) are sites of high cell-surface γ-secretase activity, as well as sites of constrained physical space that excludes γ-secretase substrates having large extracellular domains (ECDs) like Notch. ECD shedding initiates drastic spatial relocalization of Notch to cadAJs, allowing enzyme-substrate interactions and downstream signaling. Spatial mutations by adjusting the ECD size or the physical constraint alter signaling. Dysregulation of this spatial switch promotes precocious differentiation of ventricular zone neural progenitor cells in vivo. We show the generality of this spatial switch for amyloid precursor protein proteolysis. Thus, cadAJs create spatially distinct biochemical compartments regulating cleavage events involving γ-secretase and preventing aberrant activation of receptors. One Sentence Summary Notch cleavage by γ-secretase is regulated through dynamic spatial control of receptors, adhesion molecules, and activating proteases

Size-dependent protein segregation creates a spatial switch for Notch signaling and function