Aberrant cleavage of Notch by gamma-secretase leads to several types of cancer, but how gamma-secretase recognizes its substrate remains unknown. Here we report the cryo-electron microscopy structure of human gamma-secretase in complex with a Notch fragment at a resolution of 2.7 angstrom. The transmembrane helix of Notch is surrounded by three transmembrane domains of PS1, and the carboxyl-terminal beta-strand of the Notch fragment forms a beta-sheet with two substrate-induced beta-strands of PS1 on the intracellular side. Formation of the hybrid beta-sheet is essential for substrate cleavage, which occurs at the carboxyl-terminal end of the Notch transmembrane helix. PS1 undergoes pronounced conformational rearrangement upon substrate binding. These features reveal the structural basis of Notch recognition and have implications for the recruitment of the amyloid precursor protein by gamma-secretase.