The neural circuits governing the induction and progression of neurodegeneration and memory impairment in Alzheimer's disease (AD) are incompletely understood. The mammillary body (MB), a subcortical node of the medial limbic circuit, is one of the first brain regions to exhibit amyloid deposition in the 5xFAD mouse model of AD. Amyloid burden in the MB correlates with pathological diagnosis of AD in human postmortem brain tissue. Whether and how MB neuronal circuitry contributes to neurodegeneration and memory deficits in AD are unknown. Using 5xFAD mice and postmortem MB samples from individuals with varying degrees of AD pathology, we identified two neuronal cell types in the MB harboring distinct electrophysiological properties and long-range projections: lateral neurons and medial neurons. lateral MB neurons harbored aberrant hyperactivity and exhibited early neurodegeneration in 5xFAD mice compared with lateral MB neurons in wild-type littermates. Inducing hyperactivity in lateral MB neurons in wild-type mice impaired performance on memory tasks, whereas attenuating aberrant hyperactivity in lateral MB neurons ameliorated memory deficits in 5xFAD mice. Our findings suggest that neurodegeneration may be a result of genetically distinct, projection-specific cellular dysfunction and that dysregulated lateral MB neurons may be causally linked to memory deficits in AD.