Reverse signaling through the ephrinB ligands is important for several morphogenetic events, such as axon guidance, neuronal plasticity, spine maturation, and synaptogenesis. Signaling is initiated by binding of EphB receptors to ephrinB ligands, stimulating their tyrosine phosphorylation via an unclear mechanism. Here we show that this mechanism involves presenilin1 (PS1)/γ-secretase regulation of phosphoprotein associated with glycosphingolipid-enriched microdomains/Csk binding protein (PAG/Cbp), an adaptor protein that controls the activity of Src kinases. Using immunoprecipitation and Western blot of mouse primary neuronal and human embryonic kidney (HEK293) cell extracts overexpressing PAG/Cbp, we show that EphB2 induces tyrosine dephosphorylation of PAG/Cbp in a γ-secretase-dependent manner. In these cells, PAG/Cbp dephosphorylation is promoted by the PS1/γ-secretase-produced fragment of ephrinB2 cleavage (ephrinB2/CTF2), which forms complexes with PAG/Cbp when introduced exogenously. EphB2-induced tyrosine phosphorylation of ephrinB2 depends on PAG/Cbp because EphB2 cannot increase ephrinB2 phosphorylation in cells treated with anti-PAG siRNA or in PAG/Cbp-knockout (KO) cells. Furthermore, in contrast to WT PS1, familial Alzheimer disease (FAD) PS1 mutants expressed in PS1-KO mouse embryonic fibroblasts inhibited both the EphB2-induced dephosphorylation of PAG/Cbp and the phosphorylation of ephrinB2. PS1 FAD mutations may thus inhibit the function of ephrinB in the brain, promoting neurodegeneration in Alzheimer disease.