Brain-derived neurotrophic factor (BDNF) and its high-affinity full-length (FL) receptor, TrkB-FL, play a central role in the nervous system by providing trophic support to neurons and regulating synaptic plasticity and memory. TrkB and BDNF signaling are impaired in Alzheimer's disease (AD), a neurodegenerative disease involving accumulation of amyloid-β (Aβ) peptide. We recently showed that Aβ leads to a decrease of TrkB-FL receptor and to an increase of truncated TrkB receptors by an unknown mechanism. In the present study, we found that (1) Aβ selectively increases mRNA levels for the truncated TrkB isoforms without affecting TrkB-FL mRNA levels, (2) Aβ induces a calpain-mediated cleavage on TrkB-FL receptors, downstream of Shc-binding site, originating a new truncated TrkB receptor (TrkB-T') and an intracellular fragment (TrkB-ICD), which is also detected in postmortem human brain samples, (3) Aβ impairs BDNF function in a calpain-dependent way, as assessed by the inability of BDNF to modulate neurotransmitter (GABA and glutamate) release from hippocampal nerve terminals, and long-term potentiation in hippocampal slices. It is concluded that Aβ-induced calpain activation leads to TrkB cleavage and impairment of BDNF neuromodulatory actions.