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Intracellular amyloid beta oligomer (iAβo) accumulation and neuronal hyperexcitability are two crucial events at early stages of Alzheimer's disease (AD). However, to date, no mechanism linking iAβo with an increase in neuronal excitability has been reported. Here, the effects of human AD brain‐derived (h‐iAβo) and synthetic (iAβo) peptides on synaptic currents and action potential firing were investigated in hippocampal neurons. Starting from 500 pM, iAβo rapidly increased the frequency of synaptic currents and higher concentrations potentiated the AMPA receptor‐mediated current. Both effects were PKC‐dependent. Parallel recordings of synaptic currents and nitric oxide (NO)‐associated fluorescence showed that the increased frequency, related to pre‐synaptic release, was dependent on a NO‐mediated retrograde signaling. Moreover, increased synchronization in NO production was also observed in neurons neighboring those dialyzed with iAβo, indicating that iAβo can increase network excitability at a distance. Current‐clamp recordings suggested that iAβo increased neuronal excitability via AMPA‐driven synaptic activity without altering membrane intrinsic properties. These results strongly indicate that iAβo causes functional spreading of hyperexcitability through a synaptic‐driven mechanism and offers an important neuropathological significance to intracellular species in the initial stages of AD, which include brain hyperexcitability and seizures., In the presence of iAβo, PKC is activated (a), which in turn allows the production of nitric oxide (NO) at the post‐synaptic level, increasing the release of neurotransmitters (b) (evidenced as an increase in the frequency of mPSC). PKC also increases AMPA receptor current (c), increasing post‐synaptic depolarization and neuronal excitability (d). Finally, iAβo increases synchronization NO production in nearby neurons that do not have iAβo (e).