The pathogenic process in Alzheimer's disease (AD) appears to be closely linked to the neurotoxic action of amyloid-β (Aβ) oligomers. Recent studies have shown that these oligomers bind with high affinity to the membrane-anchored cellular prion protein (PrP(C)). It has also been proposed that this binding might mediate some of the toxic effects of the oligomers. Here, we show that the soluble (membrane anchor-free) recombinant human prion protein (rPrP) and its N-terminal fragment N1 block Aβ oligomers-induced inhibition of long-term potentiation (LTP) in hippocampal slices, an important surrogate marker of cognitive deficit associated with AD. rPrP and N1 are also strikingly potent inhibitors of Aβ cytotoxicity in primary hippocampal neurons. Furthermore, experiments using hippocampal slices and neurons from wild-type and PrP(C) null mice (as well as rat neurons in which PrP(C) expression was greatly reduced by gene silencing) indicate that, in contrast to the impairment of synaptic plasticity by Aβ oligomers, the cytotoxic effects of these oligomers, and the inhibition of these effects by rPrP and N1, are independent of the presence of endogenous PrP(C). This suggests fundamentally different mechanisms by which soluble rPrP and its fragments inhibit these two toxic responses to Aβ. Overall, these findings provide strong support to recent suggestions that PrP-based compounds may offer new avenues for pharmacological intervention in AD.