Amyloid-beta peptide (Abeta) accumulation in senile plaques, a pathological hallmark of Alzheimer's disease (AD), has been implicated in neuronal degeneration. We have recently demonstrated that Abeta induced oligodendrocyte (OLG) apoptosis, suggesting a role in white matter pathology in AD. Here, we explore the molecular mechanisms involved in Abeta-induced OLG death, examining the potential role of ceramide, a known apoptogenic mediator. Both Abeta and ceramide induced OLG death. In addition, Abeta activated neutral sphingomyelinase (nSMase), but not acidic sphingomyelinase, resulting in increased ceramide generation. Blocking ceramide degradation with N-oleoyl-ethanolamine exacerbated Abeta cytotoxicity; and addition of bacterial sphingomyelinase (mimicking cellular nSMase activity) induced OLG death. Furthermore, nSMase inhibition by 3-O-methyl-sphingomyelin or by gene knockdown using antisense oligonucleotides attenuated Abeta-induced OLG death. Glutathione (GSH) precursors inhibited Abeta activation of nSMase and prevented OLG death, whereas GSH depletors increased nSMase activity and Abeta-induced death. These results suggest that Abeta induces OLG death by activating the nSMase-ceramide cascade via an oxidative mechanism.