Transgenic mice overexpressing mutant human amyloid precursor protein (PDAPP mice) develop several Alzheimer's disease (AD)–like lesions including an age‐related accumulation of amyloid‐β (Aβ)–containing neuritic plaques. Although aged, heterozygous PDAPP mice also exhibit synaptic and glial cell changes characteristic of AD pathology, no evidence of widespread neuronal loss has been observed. The present study sought to determine whether homozygous PDAPP mice, which express very high levels of Aβ peptide, exhibit AD‐like cholinergic degenerative changes, and whether the changes parallel the deposition of Aβ plaques. Mice were examined at 2 and 4 months and at 1 and 2 years of age. There was an age‐related increase in the density of Aβ plaques in the cortex and hippocampus of the PDAPP animals; at 4 months of age there were very few plaques, and at 2 years there was a very high density of plaques. There was an age‐related reduction in the density of cholinergic nerve terminals in the cerebral cortex; at 2 months there was a normal density of nerve terminals, but as early as age 4 months there was an approximately 50% reduction. However, at age 2 years there was no difference in the number or size of basal forebrain cholinergic somata compared with 2‐month‐old PDAPP mice. These data indicated that the homozygous PDAPP mouse exhibits cholinergic nerve terminal degenerative pathology and that the cortical neurodegenerative changes occur before the deposition of Aβ‐containing neuritic plaques. J. Comp. Neurol. 462:371–381, 2003. © 2003 Wiley‐Liss, Inc.