The accumulation of β-amyloid oligomers is a hallmark of Alzheimer’s disease, inducing neural and network dysfunction in the early stages of pathology. The hippocampus is affected early in the pathogenesis of AD, however the impact of soluble β-amyloid on the dentate gyrus (DG) subregion of the hippocampus and its interaction with nicotinic acetylcholine receptors (nAChRs) within this region are not known. Using a localized model of over-expression, we show that β-amyloid induces early-onset neuronal hyperactivity and hippocampal-dependent memory deficits in mice. Further, we find the DG region to be under potent and sub-type specific nicotinic control in both healthy and pathophysiological conditions, with targeted receptor inhibition leading to a mnemonic rescue against localized amyloidosis. We show that while neurogenesis and synaptic functions are not severely affected in our model, reducing β2-containing nAChR function is associated with the promotion of young adult-born neurons within the pathological network, suggesting a possible protective mechanism. Our data thus reveal the DG network level changes which occur in the early-stages of β-amyloid accumulation and highlight the downstream consequences of targeted nicotinic neuromodulation.