Alzheimer's disease is recognized post mortem by the presence of extracellular senile plaques, made primarily of aggregation of amyloid β peptide (Aβ). This peptide has consequently been regarded as the principal toxic factor in the neurodegeneration of Alzheimer's disease. As such, intense research effort has been directed at determining its source, activity and fate, primarily with a view to preventing its formation or its biological activity, or promoting its degradation. Clearly, much progress has been made concerning its formation by proteolytic processing of the amyloid precursor protein, and its degradation by enzymes such as neprilysin and insulin degrading enzyme. The activities of Aβ, however, are numerous and yet to be fully elucidated. What is currently emerging from such studies is a diffuse but steadily growing body of data that suggests Aβ has important physiological functions and, further, that it should only be regarded as toxic when its production and degradation are imbalanced. Here, we review these data and suggest that physiological levels of Aβ have important physiological roles, and may even be crucial for neuronal cell survival. Thus, the view of Aβ being a purely toxic peptide requires re-evaluation.