Alzheimer's disease (AD) and diabetes are clinically positively correlated. However, the connection between them is not clarified. Here, using Drosophila as a model system, we show that reducing insulin signaling can effectively suppress the toxicity from Aβ (Amyloid beta 42) expression. On the other hand, Aβ accumulation led to the elevation of fly insulin-like peptides (ILPs) and activation of insulin signaling in the brain. Mechanistically, these observations are attributed to a reciprocal competition between Drosophila insulin-like peptides and Aβ for the activity of insulin-degrading enzyme (IDE). Intriguingly, peripheral insulin signaling is decreased despite its heightened activity in the brain. While many upstream factors may modify Aβ toxicity, our results suggest that insulin signaling is the main downstream executor of Aβ damage, and thus may serve as a promising target for Alzheimer's treatment in non-diabetes patients. This study explains why more Alzheimer's cases are found in diabetes patients.