Disruption of cholinergic neurotransmission contributes to the memory impairment that characterizes Alzheimer disease (AD). Since the amyloid cascade hypothesis of AD pathogenesis postulates that amyloid β (Aβ) peptide accumulation in critical brain regions also contributes to memory impairment, this study assessed cholinergic function in transgenic mice where the human Aβ peptide is overexpressed. This study first measured hippocampal acetylcholine (ACh) release in young,freely moving PDAPP mice, a well-characterized transgenic mouse model of AD, and found marked Aβ-dependent alterations in both basal and evoked ACh release compared with WT controls. This study also found that Aβ could directly interact with the high-affinity choline transporter which may impair steady-state and on-demand ACh release. Treatment of PDAPP mice with the anti-Aβ antibody m266 rapidly and completely restored hippocampal ACh release and high-affinity choline uptake while greatly reducing impaired habituation learning that is characteristic of these mice. Thus, soluble “cholinotoxic” species of the Aβ peptide can directly impair cholinergic neurotransmission in PDAPP mice leading to memory impairment in the absence of overt neurodegeneration. Treatment with certain anti-Aβ antibodies may therefore rapidly reverse this cholinergic dysfunction and relieve memory deficits associated with early AD.