Alzheimer's disease is characterized by intracerebral deposition of β-amyloid (Aβ). While Aβ40 is the most abundant form, neurotoxicity is mainly mediated by Aβ42. Sequential cleavage of amyloid precursor protein (APP) by β- and γ-secretases gives rise to full-length Aβ (Aβ1-x) and N-terminally truncated Aβ' (Aβ11-x) whereas cleavage by α- and γ-secretases leads to the shorter p3 peptides (Aβ17-x). We uncovered significantly higher ratios of 42- versus 40-ending variants for Aβ and Aβ' than for p3 secreted by mouse neurons and human induced pluripotent stem cell (iPSC)-derived neurons or produced in a cell-free γ-secretase assay with recombinant APP-CTFs. The 42:40 ratio was highest for Aβ', followed by Aβ and then p3. Mass spectrometry analysis of APP intracellular domains revealed differential processing of APP-C83, APP-C89, and APP-C99 by γ-secretase already at the ε-cleavage stage. This mechanistic insight could aid in developing substrate-targeted modulators of APP-C99 processing to specifically lower the Aβ42:Aβ40 ratio without compromising γ-secretase function.