Cyclodextrins (CDs) are cyclic oligosaccharides composed of a lipophilic central cavity and a hydrophilic outer surface. Some CDs are capable of extracting cholesterol from cell membranes and can affect function of receptors and proteins localized in cholesterol-rich membrane domains. In this report, we demonstrate the neuroprotective activity of some CD derivatives against oxygen-glucose deprivation (OGD), N-methyl-D-aspartic acid (NMDA) and glutamate in cortical neuronal cultures. Although all CDs complexed with NMDA or glutamate, only beta-, methylated beta- and sulfated beta-CDs displayed neuroprotective activity and lowered cellular cholesterol. Only CDs that lowered cholesterol levels redistributed the NMDA receptor NR2B subunit, PSD-95 (postsynaptic density protein 95 kDa) and neuronal nitric oxide synthase (nNOS) from Triton X-100 insoluble membrane domains to soluble fractions. Cholesterol repletion counteracted the ability of methylated beta-CD to protect against NMDA toxicity, and reversed NR2B, PSD-95 and nNOS localization to Triton X-100 insoluble membrane fraction. Surprisingly, neuroprotective CDs had minimal effect on NMDA receptor-mediated increases in intracellular Ca(2+) concentration ([Ca(2+)](i)), but did suppress OGD-induced increases in [Ca(2+)](i). beta-CD, but not Mbeta-CD, also caused a slight block of NMDA-induced currents, suggesting a minor contribution to neuroprotection by direct action on NMDA receptors. Taken together, data suggest that cholesterol extraction from detergent-resistant microdomains affects NMDA receptor subunit distribution and signal propagation, resulting in neuroprotection of cortical neuronal cultures against ischemic and excitotoxic insults. Since cholesterol-rich membrane domains exist in neuronal postsynaptic densities, these results imply that synaptic NMDA receptor subpopulations underlie excitotoxicity, which can be targeted by CDs without affecting overall neuronal Ca(2+) levels.