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In Alzheimer's disease (AD), soluble amyloid-β oligomers (AβOs) trigger neurotoxic signaling, at least partially, via the cellular prion protein (PrPC). However, it is unknown whether other ligands of PrPC can regulate this potentially toxic interaction. Stress-inducible phosphoprotein 1 (STI1), an Hsp90 cochaperone secreted by astrocytes, binds to PrPC in the vicinity of the AβO binding site to protect neurons against toxic stimuli. Here, we investigated a potential role of STI1 in AβO toxicity. We confirmed the specific binding of AβOs and STI1 to the PrP and showed that STI1 efficiently inhibited AβO binding to PrP in vitro (IC50 of ~70 nM) and also decreased AβO binding to cultured mouse primary hippocampal neurons. Treatment with STI1 prevented AβO-induced synaptic loss and neuronal death in mouse cultured neurons and long-term potentiation inhibition in mouse hippocampal slices. Interestingly, STI1- haploinsufficient neurons were more sensitive to AβO-induced cell death and could be rescued by treatment with recombinant STI1. Noteworthy, both AβO binding to PrPC and PrPC-dependent AβO toxicity were inhibited by TPR2A, the PrPC-interacting domain of STI1. Additionally, PrPC-STI1 engagement activatedα7 nicotinic acetylcholine receptors, which participated in neuroprotection against AβO-induced toxicity. We found an age-dependent upregulation of cortical STI1 in the APPswe/PS1dE9 mouse model of AD and in the brains of AD-affected individuals, suggesting a compensatory response. Our findings reveal a previously unrecognized role of the PrPC ligand STI1 in protecting neurons in AD and suggest a novel pathway that may help to offset AβO-induced toxicity. [ABSTRACT FROM AUTHOR]