Amyloid-beta (Aβ) oligomers are thought to trigger Alzheimer's disease pathophysiology. Cellular prion protein (PrP^C) selectively binds oligomeric Aβ and can mediate Alzheimer's disease–related phenotypes. We examined the specificity, distribution and signaling of Aβ-PrP^C complexes, seeking to understand how they might alter the function of NMDA receptors (NMDARs) in neurons. PrP^C is enriched in postsynaptic densities, and Aβ-PrP^C interaction leads to Fyn kinase activation. Soluble Aβ assemblies derived from the brains of individuals with Alzheimer's disease interacted with PrP^C to activate Fyn. Aβ engagement of PrP^C-Fyn signaling yielded phosphorylation of the NR2B subunit of NMDARs, which was coupled to an initial increase and then a loss of surface NMDARs. Aβ-induced dendritic spine loss and lactate dehydrogenase release required both PrP^C and Fyn, and human familial Alzheimer's disease transgene–induced convulsive seizures did not occur in mice lacking PrP^C. These results delineate an Aβ oligomer signal transduction pathway that requires PrP^C and Fyn to alter synaptic function, with deleterious consequences in Alzheimer's disease.