Multiple lines of evidence, from molecular and cellular to epidemiologic, have implicated nicotinic transmission in the pathology of Alzheimer's disease. In this review we present evidence for nicotinic receptor-mediated protection against beta-amyloid and glutamate neurotoxicity, and the signal transduction involved in this mechanism. The data are based mainly on our studies using rat-cultured primary neurons. Nicotine-induced protection was blocked by an alpha7 nicotinic receptor antagonist, a phosphatidylinositol 3-kinase inhibitor, and an Src inhibitor. Levels of phosphorylated Akt, an effector of phosphatidylinositol 3-kinase; Bcl-2; and Bcl-x were increased by nicotine administration. From these experimental data, our hypothesis for the mechanism of nicotinic receptor-mediated survival signal transduction is that the alpha7 nicotinic receptor stimulates the Src family, which activates phosphatidylinositol 3-kinase to phosphorylate Akt, which subsequently transmits the signal to upregulate Bcl-2 and Bcl-x. Upregulation of Bcl-2 and Bcl-x could prevent cells from neuronal death induced by beta-amyloid and glutamate. These findings suggest that an early diagnosis of Alzheimer's disease and protective therapy with nicotinic receptor stimulation could delay the progress of Alzheimer's disease.