The cellular prion protein (PrPC) is a key neuronal receptor for amyloid-β oligomers (AβO), mediating their neurotoxicity, which contributes to the neurodegeneration in Alzheimer’s disease (AD). Similarly to the amyloid precursor protein (APP), PrPC is proteolytically cleaved from the cell surface by a disintegrin and metalloprotease, ADAM10. We hypothesized that ADAM10-modulated PrPC shedding would alter the cellular binding and cytotoxicity of AβO. Here, we found that in human neuroblastoma cells, activation of ADAM10 with the muscarinic agonist carbachol promotes PrPC shedding and reduces the binding of AβO to the cell surface, which could be blocked with an ADAM10 inhibitor. Conversely, siRNA-mediated ADAM10 knockdown reduced PrPC shedding and increased AβO binding, which was blocked by the PrPC-specific antibody 6D11. The retinoic acid receptor analog acitretin, which up-regulates ADAM10, also promoted PrPC shedding and decreased AβO binding in the neuroblastoma cells and in human induced pluripotent stem cell (iPSC)-derived cortical neurons. Pretreatment with acitretin abolished activation of Fyn kinase and prevented an increase in reactive oxygen species caused by AβO binding to PrPC. Besides blocking AβO binding and toxicity, acitretin also increased the non-amyloidogenic processing of APP. However, in the iPSC-derived neurons, Aβ and other amyloidogenic processing products did not exhibit a reciprocal decrease upon acitretin treatment. These results indicate that by promoting the shedding of PrPC in human neurons, ADAM10 activation prevents the binding and cytotoxicity of AβO, revealing a potential therapeutic benefit of ADAM10 activation in AD.