Alzheimer's disease is characterized by the accumulation of neurotoxic amyloidogenic peptide Abeta, degeneration of the cholinergic innervation to the hippocampus (the septohippocampal pathway), and progressive impairment of cognitive function, particularly memory. Abeta is a ligand for the p75 neurotrophin receptor (p75(NTR)), which is best known for mediating neuronal death and has been consistently linked to the pathology of Alzheimer's disease. Here we examined whether p75(NTR) is required for Abeta-mediated effects. Treatment of wild-type but not p75(NTR)-deficient embryonic mouse hippocampal neurons with human Abeta(1-42) peptide induced significant cell death. Furthermore, injection of Abeta(1-42) into the hippocampus of adult mice resulted in significant degeneration of wild-type but not p75(NTR)-deficient cholinergic basal forebrain neurons, indicating that the latter are resistant to Abeta-induced toxicity. We also found that neuronal death correlated with Abeta(1-42) peptide-stimulated accumulation of the death-inducing p75(NTR) C-terminal fragment generated by extracellular metalloprotease cleavage of full-length p75(NTR). Although neuronal death was prevented in the presence of the metalloprotease inhibitor TAPI-2 (tumor necrosis factor-alpha protease inhibitor-2), Abeta(1-42)-induced accumulation of the C-terminal fragment resulted from inhibition of gamma-secretase activity. These results provide a novel mechanism to explain the early and characteristic loss of cholinergic neurons in the septohippocampal pathway that occurs in Alzheimer's disease.