Neuronal and synaptic degeneration are the best pathological correlates for memory decline in Alzheimer's disease (AD). Although the accumulation of soluble low-molecular-weight amyloid-β (Aβ) oligomers has been suggested to trigger neurodegeneration in AD, animal models overexpressing or infused with Aβ lack neuronal loss at the onset of memory deficits. Using a novel in vivo approach, we found that repeated hippocampal injections of small soluble Aβ(1-42) oligomers in awake, freely moving mice were able to induce marked neuronal loss, tau hyperphosphorylation, and deficits in hippocampus-dependent memory. The neurotoxicity of small Aβ(1-42) species was observed in vivo as well as in vitro in association with increased caspase-3 activity and reduced levels of the NMDA receptor subunit NR2B. We found that the sequestering agent transthyretin is able to bind the toxic Aβ(1-42) species and attenuated the loss of neurons and memory deficits. Our novel mouse model provides evidence that small, soluble Aβ(1-42) oligomers are able to induce extensive neuronal loss in vivo and initiate a cascade of events that mimic the key neuropathological hallmarks of AD.