Amyloid β (Aβ) peptides play a central role in the pathophysiology of Alzheimer's disease (AD). The cellular mechanisms underlying Aβ toxicity, however, are poorly understood. Here we show that Aβ_25-35 and Aβ_1-40 acutely and differentially affect the characteristics of 3 classes of medial septum (MS) neurons in mice. In glutamatergic neurons Aβ increases firing frequency and blocks the A- and the M-current (I_A and I_M, respectively). While the I_A block is similar in other MS neuron classes, the block of I_M is specific to glutamatergic neurons. I_M block and a simulated Aβ block mimic the Aβ-induced increase in spontaneous firing in glutamatergic neurons. Calcium imaging shows that under control conditions glutamatergic neurons rarely fire while nonglutamatergic neurons fire coherently at theta frequencies. Aβ increases the firing rate of glutamatergic neurons while nonglutamatergic neurons lose theta firing coherence. Our results demonstrate that Aβ-induced dysfunction of glutamatergic neurons via I_M decrease diminishes MS rhythmicity, which may negatively affect hippocampal rhythmogenesis and underlie the memory loss observed in Alzheimer's disease.