Although neuronal pathology and synaptic loss are salient features of Alzheimer’s disease (AD), the underlying mechanisms involved are unknown. Using double-immunolabeled preparations, we found that both the density and the total lengths of axons are decreased within the AB-containing area of senile plaques (SP) in comparison with the adjacent neuropil. These observations suggest that axotomy is occurring in the vicinity of the SP which could account for the synaptic loss. Since AB in solution has been shown to be neurotoxic in vitro, we tested whether intact SP cores isolated from AD brain were equally detrimental when presented to retinal ganglion neurons. Surprisingly, SPs did not appear to be toxic or even repulsive to neurons since they adhered well and elaborated axons which wrapped tightly around the SP core. In the presence of cortical astrocytes, however, neurons appeared to avoid SP cores. We found that astrocytes accumulate and deposit chondroitin sulfate proteoglycans (CSPGs) around SP cores in vitro in a pattern similar to that observed around SPs in Alzheimer’s disease brain. Neuronal avoidance of astrocyte-conditioned SP cores could be due to the axon outgrowth inhibitory nature of CSPGs. These results suggest that astrocytic reaction to SPs, including increased CSPGs, may facilitate the decreased axon density and synaptic loss in AD brain. Moreover, the similarities between swollen axon endings following axotomy in trauma and the dystrophic neurites of the SP suggest that dystrophic neurites in AD may be exhibiting regenerative failure rather than aberrant sprouting.