Alzheimer's disease is the most common cause of dementia in the elderly, and manifests as progressive cognitive decline and profound neuronal loss. The principal neuropathological hallmarks of Alzheimer's disease are the senile plaques and the neurofibrillary tangles. The senile plaques are surrounded by activated microglia, which are largely responsible for the proinflammatory environment within the diseased brain. Microglia are the resident innate immune cells in the brain. In response to contact with fibrillar beta-amyloid, microglia secrete a diverse array of proinflammatory molecules. Evidence suggests that oxidative stress emanating from activated microglia contribute to the neuronal loss characteristic of this disease. The source of fibrillar beta-amyloid induced reactive oxygen species is primarily the microglial nicotinamide adenine dinucleotide phosphate (NADPH) oxidase. The NADPH oxidase is a multicomponent enzyme complex that, upon activation, produces the highly reactive free radical superoxide. The cascade of intracellular signaling events leading to NADPH oxidase assembly and the subsequent release of superoxide in fibrillar beta-amyloid stimulated microglia has recently been elucidated. The induction of reactive oxygen species, as well as nitric oxide, from activated microglia can enhance the production of more potent free radicals such as peroxynitrite. The formation of peroxynitrite causes protein oxidation, lipid peroxidation and DNA damage, which ultimately lead to neuronal cell death. The elimination of beta-amyloid-induced oxidative damage through the inhibition of the NADPH oxidase represents an attractive therapeutic target for the treatment of Alzheimer's disease.