The reduction of amyloid beta (Aβ) has been shown to be effective in treating Alzheimer’s Disease (AD), but an underlying assumption that neurons are the main source of pathogenic Aβ remains untested. Here we show that oligodendrocytes produce significant amounts of Aβ, which in turn promotes abnormal neuronal hyperactivity in AD. Initially, we assessed publicly available single cell RNA-sequencing and proteomics databases and showed that oligodendrocytes express all the components required to produce Aβ. By employing RNAscope in situ hybridisation we revealed that the brains of AD patients have a greater number of these oligodendrocytes capable of producing Aβ. Next, we derived oligodendrocytes from human familial AD iPSCs and show that these cells produce more Aβ, and with a greater proportion as soluble aggregates, compared to neurons. Additionally, we produced AppNL-G-Fmice with BACE1 knocked out specifically in oligodendrocytes and found that suppressing oligodendrocyte production of Aβ improves abnormal neuronal hyperactivity in the mouse model. Furthermore, we show that local administration of Aβ-containing oligodendrocyte conditioned media into the brains of wild-type mice promotes increased neuronal activity, which was not observed with media depleted of Aβ. We thus propose that selective targeting of oligodendrocyte Aβ production could be exploited for treating AD.