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Alzheimer’s disease (AD) is the most prevalent form of dementia and soluble amyloid β (Aβ) oligomers are thought to play a critical role in AD pathogenesis. Cellular prion protein (PrP^C) is a high-affinity receptor for Aβ oligomers and mediates some of their toxic effects. The <i>N</i>-terminal region of PrP^C can interact with Aβ, particularly the region encompassing residues 95–110. In this study, we identified a soluble and unstructured prion-derived peptide (PrP_107–120) that is external to this region of the sequence and was found to successfully reduce the mitochondrial impairment, intracellular ROS generation and cytosolic Ca²⁺ uptake induced by oligomeric Aβ₄₂ ADDLs in neuroblastoma SH-SY5Y cells. PrP_107–120 was also found to rescue SH-SY5Y cells from Aβ₄₂ ADDL internalization. The peptide did not change the structure and aggregation pathway of Aβ₄₂ ADDLs, did not show co-localization with Aβ₄₂ ADDLs in the cells and showed a partial colocalization with the endogenous cellular PrP^C. As a sequence region that is not involved in Aβ binding but in PrP self-recognition, the peptide was suggested to protect against the toxicity of Aβ₄₂ oligomers by interfering with cellular PrP^C and/or activating a signaling that protected the cells. These results strongly suggest that PrP_107–120 has therapeutic potential for AD.