Sequential proteolysis of the amyloid precursor protein (APP) by γ‐secretases generates amyloid‐β (Aβ) peptides and defines the proportion of short‐to‐long Aβ peptides, which is tightly connected to Alzheimer's disease (AD) pathogenesis. Here, we study the mechanism that controls substrate processing by γ‐secretases and Aβ peptide length. We found that polar interactions established by the APPC99 ectodomain (ECD), involving but not limited to its juxtamembrane region, restrain both the extent and degree of γ‐secretases processive cleavage by destabilizing enzyme–substrate interactions. We show that increasing hydrophobicity, via mutation or ligand binding, at APPC99‐ECD attenuates substrate‐driven product release and rescues the effects of Alzheimer's disease‐associated pathogenic γ‐secretase and APP variants on Aβ length. In addition, our study reveals that APPC99‐ECD facilitates the paradoxical production of longer Aβs caused by some γ‐secretase inhibitors, which act as high‐affinity competitors of the substrate. These findings assign a pivotal role to the substrate ECD in the sequential proteolysis by γ‐secretases and suggest it as a sweet spot for the potential design of APP‐targeting compounds selectively promoting its processing by these enzymes. Synopsis Sequential proteolysis of amyloid precursor protein (APP) by γ‐secretase generates various amyloid‐β (Aβ) peptides, whose length correlates with pathogenicity of Alzheimer's disease (AD)‐associated mutations. Here, the ectodomain of the APP substrate is found to define Aβ length by promoting product release and destabilizing enzyme–substrate interactions. Polar residues in the APPC99 ectodomain (APPC99‐ECD) drive product release by destabilizing enzyme–substrate interactions. Increased hydrophobicity in the substrate ECD increases both efficiency and extent of sequential γ‐secretase‐mediated proteolysis of APP and Notch. γ‐Secretase inhibitors (GSIs) DAPT and semagacestat act as high‐affinity competitors of substrates. GSI‐mediated displacement of partially digested Aβ peptides, facilitated by the APPC99‐ECD, explains paradoxical increases in longer Aβ peptides. Mitigation of APPC99‐ECD‐driven product release rescues the increased production of longer Aβ peptides linked to pathogenic variants in γ‐secretase and APP. How γ‐secretase cleaves and processes the amyloid precursor protein depends on the hydrophobicity of its ectodomain, with implications for disease mechanism and drug discovery.