Patients with Down syndrome (DS) invariably develop Alzheimer’s disease (AD) pathology in their 40s. We have recently found that overexpression of a chromosome 21-encoded microRNA-155 results in decreased levels of the membrane trafficking component, SNX27, diminishing glutamate receptor recycling and thereby impairing synaptic functions in DS. Here, we report a function of SNX27 in regulating β-amyloid (Aβ) generation by modulating γ-secretase activity. Downregulation of SNX27 using RNAi increased Aβ production, whereas overexpression of full-length SNX27, but not SNX27ΔPDZ, reversed the RNAi-mediated Aβ elevation. Moreover, genetic deletion of Snx27 promoted Aβ production and neuronal loss, whereas overexpression of SNX27 using an adeno-associated viral (AAV) vector reduced hippocampal Aβ levels in a transgenic AD mouse model. SNX27 associates with the γ-secretase complex subunit presenilin 1; this interaction dissociates the γ-secretase complex, thus decreasing its proteolytic activity. Our study establishes a molecular mechanism for Aβ-dependent pathogenesis in both DS and AD.