The major pathological features of Alzheimer’s disease (AD) include amyloid plaques composed primarily of the β-amyloid (Aβ) peptide, degenerating neurons and neurofibrillary tangles, and the presence of numerous activated astrocytes and microglia. Although extensive genetic data implicate Aβ in the neurodegenerative cascade of AD, the molecular mechanisms underlying its effects on neurons and glia and the relationship between glial activation and neuronal death are not well defined. Aβ has been shown to induce glial activation, and a growing body of evidence suggests that activated glia contribute to neurotoxicity through generation of inflammatory cytokines and neurotoxic free radicals, such as nitric oxide (NO), potent sources of oxidative stress known to occur in AD. It is therefore crucial to identify specific Aβ-induced molecular pathways mediating these responses in activated glia. We report that Aβ stimulates the activation of the transcription factor NFκB in rat astrocytes, that NFκB activation occurs selectively from p65 transactivation domain 2, and that Aβ-induced NO synthase expression and NO production occur through an NFκB-dependent mechanism. This demonstration of how Aβ couples an intracellular signal transduction pathway involving NFκB to a potentially neurotoxic response provides a key mechanistic link between Aβ and the generation of oxidative damage. Our results also suggest possible molecular targets upon which to focus future drug discovery efforts for AD.