γ-Secretase is a presenilin-containing intramembrane aspartyl protease complex that cleaves within the transmembrane domain (TMD) of nearly 150 substrates, with the amyloid precursor protein (APP) being the most well studied. APP cleavage by γ-secretase generates amyloid β-peptides (Aβ) that pathologically deposit in Alzheimer's disease. The APP TMD substrate undergoes initial endoproteolysis (ε-cleavage) followed by processive carboxypeptidase trimming of long Aβ intermediates in ∼tripeptide intervals. Although γ-secretase cleavage of Notch1 is essential in developmental biology and is altered in many cancers, the processing of this cell-surface receptor is relatively understudied. Only one sequence specificity rule is known for γ-secretase substrate processing: Aromatic residues such as phenylalanine are not tolerated in the P2' position with respect to any processing event on the APP TMD. Here we show using biochemical and mass spectrometry (MS) techniques that this specificity rule holds for Notch1 as well. Analysis of products from the reactions of a purified enzyme complex and Notch1 TMD substrate variants revealed that P2' Phe relative to ε-site cleavage reduced proteolysis and shifted initial cleavage N-terminally by one residue. Double Phe mutation near the ε site resulted in reduced proteolysis with shifting to two major initial cleavage sites, one N-terminally and one C-terminally, both of which avoid Phe in the P2' position. Additionally, three natural Phe residues were mutated to the corresponding residues in the APP TMD, which led to increased ε proteolysis. Thus, Phe residues can affect the enzyme reaction rate as well as cleavage site specificity in the Notch1 TMD.