Beta-amyloid (Aβ ) neurotoxicity is important in Alzheimer's disease (AD) pathogenesis. Aβ neurotoxicity causes oxidative stress, inflammation and mitochondrial damage resulting in neuronal degeneration and death. Oxidative stress, inflammation and mitochondrial failure are also pathophysiological mechanisms of type 2 diabetes (T(2)DM) which is characterized by insulin resistance. Interestingly, T(2)DM increases risk to develop AD which is associated with reduced neuronal insulin sensitivity (central insulin resistance). We studied the potential protective effect of adiponectin (an adipokine with insulin-sensitizing, anti-inflammatory and anti-oxidant properties) against Aβ neurotoxicity in human neuroblastoma cells (SH-SY5Y) transfected with the Swedish amyloid precursor protein (Sw-APP) mutant, which overproduced Aβ with abnormal intracellular Aβ accumulation. Cytotoxicity was measured by assay for lactate dehydrogenase (LDH) released upon cell death and lysis. Our results revealed that Sw-APP transfected SH-SY5Y cells expressed both adiponectin receptor 1 and 2, and had increased AMP-activated protein kinase (AMPK) activation and enhanced nuclear factor-kappa B (NF-κB) activation compared to control empty-vector transfected SH-SY5Y cells. Importantly, adiponectin at physiological concentration of 10 µg/ml protected Sw-APP transfected SH-SY5Y cells against cytotoxicity under oxidative stress induced by hydrogen peroxide. This neuroprotective action of adiponectin against Aβ neurotoxicity-induced cytotoxicity under oxidative stress involved 1) AMPK activation mediated via the endosomal adaptor protein APPL1 (adaptor protein with phosphotyrosine binding, pleckstrin homology domains and leucine zipper motif) and possibly 2) suppression of NF-κB activation. This raises the possibility of novel therapies for AD such as adiponectin receptor agonists.