The amyloid precursor protein (APP) undergoes sequential cleavages to generate various polypeptides, including the amyloid [beta] (1-42) peptide (A[beta][1-42]), which is believed to play a major role in amyloid plaque formation in Alzheimer's disease (AD). Here we provide evidence that, in contrast with its pathological role when accumulated, endogenous A[beta] in normal hippocampi mediates learning and memory formation. Furthermore, hippocampal injection of picomolar concentrations of exogenous A[beta](1-42) enhances memory consolidation. Correlative data suggest that A[beta] peptides may exert their function via nicotinic acetylcoline receptors. Hence, A[beta] peptides, including A[beta](1-42), play an important physiological role in hippocampal memory formation. (Contains 3 figures.)