Alzheimer's disease (AD) is a conformational disease that is characterized by amyloid-β (Aβ) deposition in the brain. Aβ exerts its toxicity in part by receptor-mediated interactions that cause down-stream protein misfolding and aggregation, as well as mitochondrial dysfunction. Recent reports indicate that Aβ may also interact directly with intracellular proteins such as the mitochondrial enzyme ABAD (Aβ binding alcohol dehydrogenase) in executing its toxic effects. Mitochondrial dysfunction occurs early in AD, and Aβ's toxicity is in part mediated by inhibition of ABAD as shown previously with an ABAD decoy peptide. Here, we employed AG18051, a novel small ABAD-specific compound inhibitor, to investigate the role of ABAD in Aβ toxicity. Using SH-SY5Y neuroblastoma cells, we found that AG18051 partially blocked the Aβ-ABAD interaction in a pull-down assay while it also prevented the Aβ42-induced down-regulation of ABAD activity, as measured by levels of estradiol, a known hormone and product of ABAD activity. Furthermore, AG18051 is protective against Aβ42 toxicity, as measured by LDH release and MTT absorbance. Specifically, AG18051 reduced Aβ42-induced impairment of mitochondrial respiration and oxidative stress as shown by reduced ROS (reactive oxygen species) levels. Guided by our previous finding of shared aspects of the toxicity of Aβ and human amylin (HA), with the latter forming aggregates in Type 2 diabetes mellitus (T2DM) pancreas, we determined whether AG18051 would also confer protection from HA toxicity. We found that the inhibitor conferred only partial protection from HA toxicity indicating distinct pathomechanisms of the two amyloidogenic agents. Taken together, our results present the inhibition of ABAD by compounds such as AG18051 as a promising therapeutic strategy for the prevention and treatment of AD, and suggest levels of estradiol as a suitable read-out.