Alzheimer's disease (AD) shows neurological symptoms common to cognitive disorders and memory loss. Several hypotheses have suggested that the accumulation of amyloid-beta peptide (Aβ) and reduction of acetylcholine synthesis cause AD. Natural ingredients, such as Cordyceps militaris, have been widely used for AD treatment. Herein, we investigated the protective role of C. militaris against neural dysfunction. First, Aβ1-42 peptide solution was incubated at 37°C for 3 days for aggregation. Next, C6 glial cells were treated with 25 μM of Aβ1-42 solution, followed by the addition of C. militaris ethanol extract (0.5, 1, 1.25, and 2.5 μg/mL); the cell viability, reactive oxygen species (ROS) production, and protein expressions were then evaluated. Reduction of viability of, and ROS generation in, Aβ1-42-treated cells were observed and compared with those in the control group. The expression levels of inducible nitric oxide synthase and cyclooxygenase-2, as well as those of phospho-p38 mitogen-activated protein kinase and phospho-c-Jun N-terminal kinase, were reduced in C. militaris-treated glial cells. Moreover, the expression of brain-derived neurotrophic factor in the C. militaris-treated cells was significantly higher than that in the control group. Thus, our findings indicate that C. militaris has the potential to protect Aβ-induced neurological damage.