We have demonstrated that aged animals show significant improvements in cognitive function and neurogenesis after brain transplantation of human neural stem cells or of human adult mesenchymal stem cells that have been dedifferentiated by transfection of the embryonic stem cell gene. We have also demonstrated that peripheral administration of a pyrimidine derivative increased cognition, endogenous brain stem cell proliferation and neurogenesis. These results indicate a bright future for stem cell therapies in Alzheimers disease (AD). Before this is realized, however, we need to consider the affect of AD pathology on stem cell biology to establish an effective stem cell therapy for this disease. Although amyloid-β (Aβ) deposition is a hallmark of AD, an absence of a phenotype in the β-amyloid precursor protein (APP) knockout mouse, might lead one to underestimate the potential physiological functions of APP and suggest that it is unessential or can be compensated for. We have found, however, that APP is needed for differentiation of neural stem cells (NSCs) in vitro, and that NSCs transplanted into a APP-knockout mouse did not migrate or differentiate - indicating that APP plays an important role in differentiation or migration process of NSCs in the brain. Then again, treatment with high a concentration of APP or its over-expression increased glial differentiation of NSCs. Human NSCs transplanted into APP-transgenic mouse brain exhibited less neurogenesis and active gliosis around the plaque like formations. Treatment of such animals with the compound, (+)-phenserine, that is known to reduce APP protein levels, increased neurogenesis and suppressed gliosis. These results suggest APP levels can regulate NSC biology in the adult brain, that altered APP metabolism in Down syndrome or AD may have implications for the pathophysiology of these diseases, and that a combination of stem cell therapy and regulation of APP levels could provide a treatment strategy for these disorders.