Recent studies have indicated an association between Alzheimer's disease (AD) and central nervous system (CNS) insulin resistance. However, the cellular mechanisms underlying the link between these two pathologies have not been elucidated. Here we show that signal transduction by neuronal insulin receptors (IR) is strikingly sensitive to disruption by soluble Abeta oligomers (also known as ADDLs). ADDLs are known to accumulate in AD brain and have recently been implicated as primary candidates for initiating deterioration of synapse function, composition, and structure. Using mature cultures of hippocampal neurons, a preferred model for studies of synaptic cell biology, we found that ADDLs caused a rapid and substantial loss of neuronal surface IRs specifically on dendrites bound by ADDLs. Removal of dendritic IRs was associated with increased receptor immunoreactivity in the cell body, indicating redistribution of the receptors. The neuronal response to insulin, measured by evoked IR tyrosine autophosphorylation, was greatly inhibited by ADDLs. Inhibition also was seen with added glutamate or potassium-induced depolarization. The effects on IR function were completely blocked by NMDA receptor antagonists, tetrodotoxin, and calcium chelator BAPTA-AM. Downstream from the IR, ADDLs induced a phosphorylation of Akt at serine473, a modification associated with neurodegenerative and insulin resistance diseases. These results identify novel factors that affect neuronal IR signaling and suggest that insulin resistance in AD brain is a response to ADDLs, which disrupt insulin signaling and may cause a brain-specific form of diabetes as part of an overall pathogenic impact on CNS synapses.