Prolonged chronic stress causing elevated plasma glucocorticoids leads to neurodegeneration. Adaptation to stress (allostasis) through neuroprotective mechanisms can delay this process. Studies on hippocampal neurons have identified carboxypeptidase E (CPE) as a novel neuroprotective protein that acts extracellularly, independent of its enzymatic activity, although the mechanism of action is unclear. Here, we aim to determine if CPE plays a neuroprotective role in allostasis in mouse hippocampus during chronic restraint stress (CRS), and the molecular mechanisms involved. Quantitative RT-PCR/in situ hybridization and Western blots were used to assay for mRNA and protein. After mild CRS (1 h/d for 7 d), CPE protein and mRNA were significantly elevated in the hippocampal CA3 region, compared to naïve littermates. In addition, luciferase reporter assays identified a functional glucocorticoid regulatory element within the cpe promoter that mediated the up-regulation of CPE expression in primary hippocampal neurons following dexamethasone treatment, suggesting that circulating plasma glucocorticoids could evoke a similar effect on CPE in the hippocampus in vivo. Overexpression of CPE in hippocampal neurons, or CRS in mice, resulted in elevated prosurvival BCL2 protein/mRNA and p-AKT levels in the hippocampus; however, CPE−/− mice showed a decrease. Thus, during mild CRS, CPE expression is up-regulated, possibly contributed by glucocorticoids, to mediate neuroprotection of the hippocampus by enhancing BCL2 expression through AKT signaling, and thereby maintaining allostasis.