The cause of elevated level of amyloid β-peptide (Aβ42) in common late-onset sporadic [Alzheimer's disease (AD)] has not been established. Here, we show that the membrane lipid peroxidation product 4-hydroxynonenal (HNE) is associated with amyloid and neurodegenerative pathologies in AD and that it enhances γ-secretase activity and Aβ42 production in neurons. The γ-secretase substrate receptor, nicastrin, was found to be modified by HNE in cultured neurons and in brain specimens from patients with AD, in which HNE-nicastrin levels were found to be correlated with increased γ-secretase activity and Aβ plaque burden. Furthermore, HNE modification of nicastrin enhanced its binding to the γ-secretase substrate, amyloid precursor protein (APP) C99. In addition, the stimulation of γ-secretase activity and Aβ42 production by HNE were blocked by an HNE-scavenging histidine analog in a 3xTgAD mouse model of AD. These findings suggest a specific molecular mechanism by which oxidative stress increases Aβ42 production in AD and identify HNE as a novel therapeutic target upstream of the γ-secretase cleavage of APP.