Alzheimers disease (AD) is a neurodegenerative disorder characterized by progressive and irreversible loss of memory and other cognitive functions. Substantial evidence based on genetic, neuropathological and biochemical data has established the central role of -amyloid protein ( βAP) in this pathology. Although the precise etiology of AD is not well understood yet, strong evidence for some of the molecular events that lead to progressive brain dysfunction and neurodegeneration in AD has been afforded by identification of biochemical pathways implicated in the generation of βAP, development of transgenic models exhibiting progressive disease pathology and by data on the effects of βAP at the neuronal network level. However, the mechanisms by which βAP causes cognitive decline have not been determined, nor is it clear if the degree of dementia correlates in time with the degree of neuronal loss. Hence, it is of interest to understand the biochemical processes involved in the mechanisms of βAP-induced neurotoxicity and the mechanisms involved in electrophysiological effects of this protein on different parameters of synaptic transmission and on neuronal firing properties. In this review we analyze recent evidence suggesting a complex role of βAP in the molecular events that lead to progressive loss of function and eventually to neurodegeneration in AD as well as the therapeutic implications based on βAP metabolism inhibition.