An increasing body of evidence suggests that soluble assemblies of amyloid beta-protein (Abeta) play an important role in the initiation of Alzheimer disease (AD). In vitro studies have found that synthetic Abeta can form soluble aggregates through self-assembly, but this process requires Abeta concentrations 100- to 1000-fold greater than physiological levels. Tissue transglutaminase (TGase) has been implicated in neurodegeneration and can cross-link Abeta. Here we show that TGase induces rapid aggregation of Abeta within 0.5-30 min, which was not observed with chemical cross-linkers. Both Abeta40 and Abeta42 are good substrates for TGase but show different aggregation patterns. Guinea pig and human TGase induced similar Abeta aggregation patterns, and oligomerization was observed with Abeta40 concentrations as low as 50 nm. The formed Abeta40 species range from 5 to 6 nm spheres to curvilinear structures of the same width, but up to 100 nm in length, that resemble the previously described self-assembled Abeta protofibrils. TGase-induced Abeta40 assemblies are resistant to a 1-h incubation with either neprilysin or insulin degrading enzyme, whereas the monomer is rapidly degraded by both proteases. In support of these species being pathological, TGase-induced Abeta40 assemblies (100 nm) inhibited long term potentiation recorded in the CA1 region of mouse hippocampus slices. Our data suggest that TGase can contribute to AD by initiating Abeta oligomerization and aggregation at physiological levels, by reducing the clearance of Abeta due to the generation of protease-resistant Abeta species, and by forming Abeta assemblies that inhibit processes involved in memory and learning. Our data suggest that TGase might constitute a specific therapeutic target for slowing or blocking the progression of AD.