In the amyloidogenic pathway associated with Alzheimer disease (AD), the amyloid precursor protein (APP) is cleaved by β-secretase to generate a 99-aa C-terminal fragment (C99) that is then cleaved by γ-secretase to generate the β-amyloid (Aβ) found in senile plaques. In previous reports, we and others have shown that γ-secretase activity is enriched in mitochondria-associated endoplasmic reticulum (ER) membranes (MAM) and that ER-mitochondrial connectivity and MAM function are upregulated in AD We now show that C99, in addition to its localization in endosomes, can also be found in MAM, where it is normally processed rapidly by γ-secretase. In cell models of AD, however, the concentration of unprocessed C99 increases in MAM regions, resulting in elevated sphingolipid turnover and an altered lipid composition of both MAM and mitochondrial membranes. In turn, this change in mitochondrial membrane composition interferes with the proper assembly and activity of mitochondrial respiratory supercomplexes, thereby likely contributing to the bioenergetic defects characteristic of AD.