PDGF promoter driven amyloid precursor protein (PDAPP) transgenic mice were accompanied by age dependent amyloid β deposition and progressive spatial memory dysfunction which emerges within a few months of age. We conducted transplantation of neuronal precursors of cholinergic neuron phenotype which were derived from human iPS (hiPS) cells into bilateral hippocampus of PDAPP mice. We first generated neuronal precursors with cholinergic neuron phenotype from hiPS cells by culturing them with retinoic acid (RA), sonic hedgehog (SHH) and noggin-Fc (NOG). Spatial memory function of PDAPP mice was significantly impaired compared to that of nontransgenic littermates at age 8 weeks. After neuronal precursor transplantation, subsequent memory dysfunction of PDAPP mice was significantly improved, compared to that of vehicle injected PDAPP mice. We observed choline acetyltransferase (ChAT) positive cholinergic human neurons and vesicle GABA transporter (VGAT) positive GABAergic human neurons in PDAPP mouse hippocampus 45 days after the transplantation. Neuronal precursors with cholinergic neuron phenotype derived from hiPS cells survived in PDAPP mouse hippocampus and their spatial memory loss was improved. hiPS cells may become applicable for the treatment of patients with dementia.