Alzheimer's disease (AD), the major contributor to dementia in the elderly, involves accumulation in the brain of extracellular plaques containing the beta-amyloid protein (Abeta) and intracellular neurofibrillary tangles of hyperphosphorylated tau protein. AD is also characterized by a loss of neurons, particularly those expressing nicotinic acetylcholine receptors (nAChRs), thereby leading to a reduction in nAChR numbers. The Abeta(1-42) protein, which is toxic to neurons, is critical to the onset and progression of AD. The discovery of new drug therapies for AD is likely to be accelerated by an improved understanding of the mechanisms whereby Abeta causes neuronal death. We examine the evidence for a role in Abeta(1-42) toxicity of nAChRs; paradoxically, nAChRs can also protect neurons when activated by nicotinic ligands. Abeta peptides and nicotine differentially activate several intracellular signaling pathways, including the phosphatidylinositol 3-kinase/v-akt murine thymoma viral oncogene homolog pathway, the extracellular signal-regulated kinase/mitogen-activated protein kinase, and JAK-2/STAT-3 pathways. These pathways control cell death or survival and the secretion of Abeta peptides. We propose that understanding the differential activation of these pathways by nicotine and/or Abeta(1-42) may offer the prospect of new routes to therapy for AD.